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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Panther Securities Plc | LSE:PNS | London | Ordinary Share | GB0005132070 | ORD 25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 300.00 | 280.00 | 320.00 | 300.00 | 300.00 | 300.00 | 0.00 | 08:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Lessors Of Real Property,nec | 13.41M | 16.99M | 0.9721 | 3.09 | 52.42M |
TIDMPNS
RNS Number : 0008M
Panther Securities PLC
25 April 2018
PANTHER SECURITIES PLC (the "Company" or the "Group") Preliminary Results Panther Securities has today announced its preliminary results for the year ended 31 December 2017. For further information; Panther Securities plc +44 (0) 1707 667 300 Andrew Perloff (Chairman) Simon Peters (CFO) Allenby Capital Limited (NOMAD & Joint Broker) +44 (0) 20 3328 5656 David Worlidge Alex Brearley CHAIRMAN'S STATEMENT
Although I am always pleased to report our year end accounts I am particularly delighted with the result for the year ended 31 December 2017 which shows our profit before tax of GBP24,791,000 which is truly a record to be proud of.
I have previously bemoaned that the property or financial derivatives valuation movements should be left out of our income statement, as they are non-cash items, so even when they swing our way favourably then it is incumbent of me to point them out.
For our year end accounts our entire property portfolio was independently valued by GL Hearn and assessed to be worth an additional GBP16,776,000 which is of course pleasing to note. Our derivative liability (SWAPS) reduced by GBP1,850,000 at that date and is certainly a step in the right direction.
If we disregarded these items from our annual profits, it still leaves GBP6,165,000 profit from our bread and butter business of collecting rents, buying and selling properties at strategically opportune times and subsequently reinvesting surplus funds for the longer term.
Our rental income receivable for this accounting year amounted to GBP12,946,000 compared to a similar figure of GBP12,965,000 last year.
Development Progress
Maldon - Surrender Premium
This freehold factory contains approximately 200,000 sq. ft. of high bay, brick built warehouse on a site of about 9.5 acres. During March 2017 we received GBP1,995,000 for the surrender of the tenant's lease. This payment was in lieu of the remaining four years rental payments of GBP500,000 p.a. and dilapidations. The refurbishment of the building should make the property more attractive for letting to potential tenants at hopefully a higher rent.
Holloway Head, Birmingham
In June 2017 our wholly owned subsidiary, Panther Developments Limited, exchanged contracts for the sale of the entire freehold and long leasehold interests in this major development opportunity. We had built up this site over thirty years and had twice received planning permission for redevelopment. We could not unfortunately take advantage of this at those times.
Panther Developments Limited exchanged contracts to sell its entire interests for GBP11,000,000 and agreed a delayed completion of six months to enable a lease extension to be progressed between the purchaser and Birmingham Council. Technically this became unconditional in July 2017. At the year-end GBP9,980,000 was outstanding.
The seller has extended the completion date for three times and we are contracted to a special purpose vehicle company that was set up only to pursue this transaction with no financial status. Given its uncertain nature, we have not brought the profit from this potential transaction into our accounts. We have already received a non-returnable deposit and extra consideration for the delays. We are very hopeful that completion will take place at the end of July 2018.
In the 2017 income statement we recognise GBP750,000 in profit on disposal relating to the non-refundable deposit. We also recognise GBP400,000 in other income relating to a fee paid to extend the contract in December 2017 (separate to the sales proceeds).
High Street, Croydon
In March 2017 we announced that we had exchanged contracts for the sale of our 105 year- long leasehold interest at High Street, Croydon for GBP800,000 for the vacant upper parts alone, which had permission for 8 flats.
As part of the deal we leased back, for the full term at a nominal ground rent, the ground floor retail element which is fully let to Sainsbury's and Princess Alice Hospice at a total rent of GBP100,000 p.a.
A delayed completion to enable certain conditions to be completed was agreed, and although delayed further than anticipated, this was completed after the year end.
Swindon Market Site
A revised planning application on this site has been submitted for ground floor restaurants, leisure uses and a fifteen storey upper part which could contain one hundred residential apartments. There has been an extensive consultation throughout the planning process and to date we have had favourable comments on the proposed scheme from all parties concerned. Shareholders will remember we had previously won planning permission for a two storey restaurant scheme following a successful appeal.
Unfortunately, although the planners and Council like our proposals, due to the much, much higher building costs for a high rise scheme, the development is not viable and certainly unable to provide all of the community benefits that the Council negotiators believe are required i.e., Section 106 payments, Community Infrastructure Levy (CIL) payments, excessively high ground rents (payable to the Council) for the residential units, etc., etc.
The proposed development is beneficial to the improvement of the town centre, and we are continuing our dialogue with the Council to see if we can mitigate the add-ons that currently make it a 'no go scheme'.
Bruce Grove, Wickford
The application for approval of some outstanding conditions has been submitted and if successful we have a builder/buyer in hand who is keen to purchase the currently vacant site and ready to start building the first phase of the development of 28 houses. We have just received permission for this scheme's reserved matters and now have one final hurdle left.
Property Disposals
In April 2017 we sold 25 Victoria Street, Wolverhampton for GBP90,000 at a small profit. This was a vacant semi derelict freehold previously held for development.
In July 2017 we sold a commercial freehold ground rent in Palm Street, Nottingham, to the tenant for GBP350,000. This was slightly above book value and although we lost GBP20,000 p.a. rent, it showed a good profit on the original cost.
In August 2017 we sold the freehold shop and commercial upper part in the centre of Glasgow, 27-35 Union Street, for GBP925,000. Our book cost was GBP710,000 and after expenses this showed a GBP196,000 profit for the loss of GBP75,000 p.a. rent.
In September 2017 we sold 50 The Kingsway, Swansea for GBP95,000. A leasehold ground rent shop lease with 38 years remaining. Again, this property was in poor condition after a tenant absconded a few years ago, but despite this we received nearly double its book value.
Also in September 2017, we sold 29 and 30 Victoria Street, Wolverhampton for GBP200,000 which was at book value. This property was in poor condition and had, like our other holdings in Victoria Street, been held for redevelopment.
SHARE DISPOSALS
MRG Systems Ltd was sold to its employees and management in December 2017. (We held 75% of the shares and now hold 15%). We received a GBP35,000 management fee during the year, and received GBP115,000 for our shares which were mainly sold to the employees and management, with some bought in for cancellation by MRG. We remained the freehold landlords of the premises but sold this property after our current year end for GBP900,000.
In April 2017 we sold 826,000 William Nash PLC unlisted ordinary shares for GBP1,486,000. Our book cost was GBP627,000. The bulk of our holding was purchased in 2004. During our holding period we received two large special dividends and regular smaller dividends.
Elektron PLC - We sold 3.3m shares in September 2017 for GBP559,000. Original cost was about GBP291,000 showing a GBP268,000 profit. We bought the bulk of our shares in 2003 and sold a major part of our holding at a much higher price for a proportionately larger profit in 2010/ 2011 and this final balance was a satisfactory conclusion.
Property Acquisitions
Springburn Shopping Centre, Glasgow
In October 2017 we acquired the Springburn Shopping Centre in Scotland which is a northern suburb of Glasgow. It is a 78,110 sq. ft. covered shopping centre, including a 24,500 sq. ft. anchor store let to B&M Bargains and some 270 car parking spaces. The site is approximately five acres and is occupied by a combination of national and local businesses. There is significant additional housing proposed for the area which should assist the future prosperity of both the area and the shopping centre.
The centre is let to 26 good quality tenants, with a diversified income profile, including a mixture of national and local covenants such as Scotmid Co-operative, Betfred, Card Factory, Brighthouse, Greggs, Santander, B&M, William Hill and Farmfoods.
The net income, after deduction of the ground lease rent of GBP60,000 p.a. and void costs is currently GBP300,000 p.a. The property is held on an 88 year unexpired long leasehold from Glasgow City Council. The price paid for our long leasehold interest was GBP2.3 million.
Britannia Shopping Centre, Hinckley
We acquired the Britannia Shopping Centre (the "Centre"), a freehold shopping centre in a prime position in Hinckley, Leicestershire.
Hinckley is a busy, vibrant market town located approximately 13 miles south west of Leicester. The Centre comprises 16 retail units arranged over ground and first floors totalling circa 82,000 sq. ft. on a site of two acres.
The Centre is the town's only covered shopping mall together with the town's principal shoppers' car park, boasting 272 parking spaces which is leased to National Car Parks (NCP) on a long lease. The majority of occupiers are national brands including Wilko, Peacocks, Boots, Greggs, Card Factory, and Poundworld amongst others. Annual footfall in the centre in 2016 was over 2,800,000.
The freehold was purchased for GBP5,333,000, plus an enormous GBP256,000 stamp duty, and it has a gross rental income of GBP908,000 p.a. and net rental income of GBP737,000 p.a., representing a net initial annual yield of 13.83%. Nearly 37% of income is secured from Wilko and NCP.
The Board believes that there are several opportunities to further improve the Centre.
Former McEwen's of Perth
In early September 2017 we completed the purchase of the freehold former department store, McEwen's of Perth. This attractive listed property is located in the centre of Perth. Purchased mainly vacant, it contains one national tenant on the corner of the building who pays an inclusive rent of circa GBP50,000 p.a. We have pre-let the balance of 35,000 sq. ft. to JE Beale PLC who have been promised financial assistance by the local council to establish their first store in Scotland.
We own other properties in High Street, Perth and have previously worked with the council who provided substantial grants to bring long-vacant upper parts back into use as flats, which are now let and rent producing. We expect to receive grants to redecorate the listed façade of this older building. In due course, this property is expected to produce double figure returns for our Group on our initial cost of approximately GBP700,000 but we will initially have to spend money on the property for outside refurbishments towards which the council has indicated they will contribute.
Post Balance Sheet Transactions
In January 2018 we sold 34 Marine Terrace, Margate for GBP450,000, which had only just been revalued at GBP250,000, thus we received a generous price from a special purchaser for a loss of only GBP16,000 p.a. rent.
In February 2018, we sold Stonehouse, Gloucester, 19 Queen Street, Ramsgate and High Street, Dudley at auction.
Stonehouse - Gloucester
MRG (which I mentioned earlier) has a freehold office at The Mill at Stonehouse, Gloucester. This former mill of 15,000 sq ft had been let to MRG Systems at GBP93,000 p.a. The letting assisted them in being independent before the employee and management buyout. We received GBP900,000 which shows a very good profit on original cost.
Ramsgate
19 Queen Street, Ramsgate a small freehold shop investment producing GBP12,000 p.a. sold for GBP147,000 producing a small profit on book value.
Dudley
High Street Dudley a large freehold vacant shop in very poor condition held for development realised GBP276,000 which was considerably in excess of its recently revalued book value.
Stockport
In March 2018 we completed the sale of Grove House, Stockport, a vacant freehold shop and office building which we had held for many years during most of which time it had always produced a good rental return for us. Whilst the building was in good condition, a developer purchased it to convert to residential units. We received GBP900,000 which was well above the recently revalued book figure.
Holloway Head, Birmingham
As mentioned above, the completion of the sale of the Company's development site in Holloway Head, Birmingham has been deferred again until 31 July 2018.
As well as a payment of GBP1,020,000 received last year, the Company received GBP400,000 in part payment on 9 April 2018 and it is expecting to receive a further GBP470,000 of the purchase consideration at the end of May 2018, with the balance payable on completion.
As a result, most of the profit on this transaction will be brought into the 2018 accounts after the actual completion takes place. Because the purchasers have expended a considerable non-recoverable amount, we are very hopeful that this sale will complete.
Sale of St Nicholas House, St Nicholas Road, Sutton
In April 2018, we exchanged contracts to sell the joint freehold/leasehold interest in St Nicholas House. Surrey Motors Limited is a wholly owned subsidiary of Panther Securities PLC which was acquired in 1987. Its sole asset is the freehold of St Nicholas House, St Nicholas Road, Sutton, which is 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 purpose built for the Crown Agents, a quasi-government organisation, which 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, had approximately 44 years to run at a low ground rent and thus had a significant value.
Early last year, the Crown Agents approached the Company indicating that it wanted to dispose of its interest in the building and it was agreed that the Company and the Crown Agents should offer for sale their joint interests which would enable the freehold of the site to be offered with vacant possession at an early date, giving it development possibilities.
After a marketing campaign by the joint agents, Carter Jonas, a number of offers were received and the Company exchanged contracts to sell the joint freehold/leasehold interest to Saint Nicholas House Ltd, with a completion due in about three months' time. The Group's share of the gross sale price proceeds amounts to approximately GBP7,837,500, with a possible small overage that is to be confirmed, but is not currently anticipated to be material. This compares to a recent revalued book figure of GBP5,540,000 for the Company's interests alone. The total consideration receivable by both the Group and the Crown Agents for the total joint freehold/leasehold interest in St. Nicholas House is GBP12,750,000.
Following completion, the Company will no longer receive the GBP320,000 p.a. rental income on this investment property.
Following our usual policy on deferred completions, the Company insisted on receiving the deposit of approximately GBP783,000.
Finances
Our finances are in good shape and have been so for some time. They currently include a potential GBP10 million of additional loan facilities agreed in April 2016, being an option to extend the loan limit within the current loan agreement, subject to usual formalities. We have significant spare cash available and a steady flow of rental income.
Business Rates
I am not sure how long it will take for it to sink in to our government administrators that retail business rates are EXCESSIVE and are causing distress to many hundreds of multiple retail and restaurant traders and their tens of thousands of employees and causing degeneration of many town centres and other adverse side effects. Much of this is caused by poorly thought out government policy, failing to deal with the unfair competition from the internet retailers, who pay little business rates, employ less staff (thus less national insurance tax), and are able to divert some of their huge profits to less taxing climates. Even Donald Trump seems to be well aware of this situation and may seek to change US taxation policy to more direct taxation on the cyber economy.
My cure for the retail desolation that is coming due to government neglect would be to immediately remove the downward phasing of rates payable, so occupiers receive the current rates assessed under the recent revaluation and immediately give all retail units a two year 25% reduction on their bills and then observe the benefits. To make up for the revenue lost, tax all sales over the internet at an extra 10% which will probably retrieve most of the lost revenue. This may help to make a more level playing field for older established retailers who bear the brunt of this government's aggressive taxation of land based traders.
Political Donations
I have not submitted my resolution to provide a donation to UKIP this year. I feel they seem to have lost their way slightly having secured the support of over 50% of the British voters for exiting the European Union (their most important policy) and we are seeing progress albeit slowly with this decision. I will personally provide them with a smaller donation as I believe it is important we have another political party as the three other main parties are failing to offer what the country needs.
Dividends
The Board will recommend a final dividend of 7p per share for the year ended 31 December 2017 at our Annual General Meeting on 22 June 2018. The payment date will be 5 September 2018, to shareholders on the register at close of business on 3 August 2018 (ex-dividend 2 August 2018).
Additionally, we are paying a special interim dividend of 10p per share on 18 May 2018 to shareholders on the register at close of business on 27 April 2018 (ex-dividend 26 April 2018) to reflect the 2017 year's success and the continued progress in 2018.
Future Prospects
We had a very good trading year ended 31 December 2017 and the current year has started well. I therefore expect our prospects for the near future will be positive with a stable but growing rental income with the potential to add value to our portfolio.
My only concern is the damage that can be done comparatively quickly by our bureaucratic legislators who have so little business experience that they haven't the slightest idea how their taxes, laws and regulatory edicts impact on all businesses creating huge extra costs and problems which eventually the customer or the taxpayer has to pay for.
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 and, of course, our tenants, most of whom pay their rents and excessive and high and often unfair business rates.
Andrew S Perloff
CHAIRMAN
24 April 2018
CHAIRMAN'S RAMBLINGS
This year was difficult for me to choose a suitable topic for my ramblings as there was such a plethora of subjects. Indeed I have been spoilt for choice.
Of course, high on its list would be the housing crisis. We all know the cause, but the cure? Various Ministers have made speeches about how they will deal with the problem. They have increased tax on buy to let, and massively increased stamp duty on high end value houses. They will punish builders who hold back sites that already have planning permission, but expect higher prices and profits. They will insist on larger Section 106 payments, larger Community Infrastructure Levy payments, a larger proportion of social housing, their demands ever growing in the direct opposite direction to the amount of new homes built.
Pension problems are also high on the list of Ministers' speeches of how they will punish directors who do not anticipate a downturn in trade with sufficient protection for company pension funds who cannot afford them due to numerous extra taxes levied and, often, when a company makes a profit or not.
Whenever I hear speeches like these it pleasantly reminds me of my favourite uncle who died twenty years ago who once, when I asked him about some then current topic in all the newspapers, would not give an opinion. I asked why? He said "If I do not open my mouth and say nothing, people may think I am stupid. However, if I do speak and give my opinion, they will know I am stupid!"
These are our ministers, very few of whom have the slightest idea or experience of the subject they are talking about and, unfortunately, are advised by similar unknowing, bureaucrats who often remain anonymous, highly paid, lucratively pensioned, and unaffected by the negative effects of the remedies proposed.
The private pensions' scandal is where one now celebrity MP is held up as a crusader for private company pensioners rights. He has, however, conveniently forgotten he was part of the Government that was instrumental in the major cause of the deficit problem, caused by the deprivation of the ability to reclaim tax levied on pension stock exchange investments from 1998 (Gordon Brown's Budget 1997).
The massive antagonism to the New President Trump whose policies have already probably halved the British companies' pension deficit and which I believe will almost certainly bring a boost to British jobs and business by showing the way with massive tax cuts in America. It appears he even believes in a special tax on internet sales to even up the tax burden for retailers who are huge employers.
Or the business rates scandal where the bureaucratic Baldricks who devised the process for payments find it sensible that provincial struggling department stores in essence have to subsidise stores like Harrods and Selfridges whom may be two of the most profitable department stores in the world AND are foreign owned.
These are all interesting subjects but when I think of business rates I am reminded of my wife who sometimes finds it difficult to get to sleep at night. When this happens I begin to explain to her about the unfairness of commercial rates, how ludicrous it is, the complicated systems of phasing in changes, the appeals system which has been gerrymandered by deceitful bureaucrats, how it destroys town centres and jobs - this usually does the trick and gets her off to sleep!
However, if this medicine is not enough, I start explaining to her the swap arrangement we have made with our Company's loans and how it does not change our business costs but somehow shows up in our Income Statement with large figures which can be positive or negative and can change substantially in a single day, but as the accounts are always produced a few months later than the accounting cut-off date, are usually no longer relevant to the printed accounts. This always works!
I finally set my sights on banks as they are so relevant to all businesses and also it is 10 years since I wrote my ramblings about Barclays Bank.
You may recall I wrote about why, after three generations of Perloffs as their customers totalling about 100 years, I felt obliged to close my personal account with them due to their incompetence.
Well, as fortune would have it, about two Christmases later I was invited to an intimate Conservative Christmas party for a "few selected supporters" but attended by most of its leading cabinet members (at that time I supported them). This sounded interesting so I decided to attend.
At a magnificent and huge listed home on the banks of the Thames, I arrived to find that of the two to three hundred people attending this 'intimate party', there were about a dozen people I knew, which was of course pleasing. After circulating for half an hour with my cranberry juice, I latched on to one of them, a very successful London property developer, who was talking to a tall, slim and smart fellow Conservative supporter.
"Hello, Andrew. How are you keeping, are you busy?". I replied in the affirmative. "Have you met --------- ----------? He used to be a Director/Chairman of Barclays Bank"
I said "Nice to meet you" and the conversation continued on banking problems of that time. I told the ex-Barclays gentleman that my family had banked with Barclays for nearly one hundred years, he smiled and asked, "How did you find them?". "Oh, absolute rubbish", I replied. He smiled then laughed and said "Oh dear". My friend commented "Well that tells you".
For some inexplicable reason our conversation did not continue much longer so I had no time to tell him a little more about why, and despite the massive failings on Barclays' part, I still retained an account at Barclays in France, which I had then had for 10 years.
At that time, this branch had had the same manager for 27 years, most of its staff were long term, knew their customers and were always helpful. They could provide you with your own cash on a signature, because of course they knew your face, voice and signature.
However, two or three years ago they brought in new rules which meant you could only take out EUR2,000 (of your own money) without a week's notice. Well, this can cause difficulties if you are travelling to Italy for a family hotel break of 3 or 4 days as cards have insufficient limits, but we managed to survive this problem. Last year I was informed that Barclays was selling their French banks and in due course I would have to close my account unless I put most of my French funds into one of their investment funds. "Non, non, non" I replied bilingually, "Not on your Nellie", I said that I intended to move the account. When I arrived early this year to deal with the changeover, I was told I could only withdraw 10,000 Euros in cash in a month, even though I had considerably more than that in the current account, without expecting any interest.
I thus approached HSBC, with whom I have had a London personal account for 30 years and who have a branch 200 yards from the Barclays branch in Antibes. I consider I have an excellent relationship with HSBC and know they have all the information and details that could possibly be required of my family and me. I thought they merely had to pass on these details (with my permission) etc. and a new account would be opened. Oh No, No, No - they were different departments. Despite being in France, they had 'Chinese walls'. I consequently had to go through the whole paraphernalia as though I was an unknown client, a possible money laundering drug dealer approaching the bank and, what's more, it proved necessary to attend the bank in person, which luckily we were able to do without disrupting our holiday plans.
I found this particularly irritating as over the previous two years HSBC had felt it necessary to "update" their "K.Y.C."* on me and unfortunately it was not the provision of beautiful pieces of fried chicken in breadcrumbs with eleven secret spices, but finding out practically all of my financial and personal life.
Their "chicken" moment started off innocuous enough asking about my income and assets and sources of wealth. I gave them an abbreviated version pointing out my income was mainly from my Panther dividends which had been regular, rising and substantial for over 30 years. I thought that would satisfy the "KYC" Forms, but no, they then asked where I had acquired the money to buy my Panther shareholding. As this was over 45 years earlier I was initially caught off-guard. However, one of the benefits of being a hoarder of nearly everything I had an auction catalogue of 1971 where we had sold 16 secondary freehold shop investments to enable us to move on to bigger and better properties. I explained how we had purchased these properties individually vacant over the previous five years and let them to produce high returns. This satisfied them for a while. Then two other banks we used started asking the same questions and luckily I was able to offer the same formulaic answer and that seemed to satisfy the other banks.
This was going on over a protracted period and one day whilst at the office I received an unknown caller on my private mobile phone, who asked for me. The caller said he was calling from HSBC, his accent and English were difficult to understand, but I ascertained he was calling from somewhere in India and he wanted to check some cheque payments Panther had made. Fair enough - so I asked him to give me the details of the payments - he said he could not until I had given him some security information. I surprisingly kept my cool and pointed out that he was someone I had never met or spoken to before, phoning from a country halfway round the world, where I was unlikely to visit, asking me secret information in an unintelligible accent before he would tell me what the so called problem was. I told him to get someone from their London office to phone me!
A few days later I found out what the problem was, after the bank had bounced about a dozen cheques. A co-director's signature was not as instantly recognisable in India as it should have been. All the cheques were comparatively small, and if I had been told who the recipients were I could have instantly approved them. This caused disproportionate embarrassment and panic as we are known for our reliability.
We recently sold some properties by auction. The auctioneer whom I have dealt with as buyer/seller over a period of nearly 50 years who knows me/my family and most of my personal and business life, etc., was forced to ask for my latest passport details/utility bills, etc. Likewise, the solicitors acting on our behalf needed personal information that should have already been known to them as they have also acted on and off for us for many years.
The world has gone mad on mistrust.
To carry out business in any normal way is becoming more and more tortuous.
It's easy to blame the banks and their very expensive and slow lawyers, but the reality is that new and fearsome rules and regulations to prevent money laundering or tax fraud have been produced ostensibly to protect the public or public coffers and if accidentally breached, entail massively disproportionate fines on the banks.
But, of course, our bureaucratic legislators have little idea of the real business and crooked world and by focusing on all 30 million+ bank customers the 10/20,000 villains allow many to slip through the net. If they allowed banks/solicitors/accountants to use their professional discretion and common sense on KYC they could concentrate on strange transactions more likely to be by the villains which would stand out like a sore thumb.
So, let's hope some common sense comes to our legislators - eventually - but I doubt it.
Yours
Andrew S Perloff
CHAIRMAN
24 April 2018
P.S. *KYC is not Kentucky Yummy Chicken but Know Your Client!
GROUP STRATEGIC REPORT
About the Group
Panther Securities PLC ("the Company") is a property investment company listed 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 950 individual property units within approximately 135 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
2017 2016 2015 2014 Restated Gross Profit Margin (gross profit/ turnover) 71% 77% 73% 66% Gearing (debt*/(debt* + equity)) 45% 49% 48% 50% Interest Cover** 2.37 1.66 times 1.65 1.22 times times times Finance cost rate (finance costs/ average borrowings for the year) 6.4% 6.6% 6.6% 6.6% Yield (rents investment properties/ average market value investment properties) 7.1% 7.7% 7.5% 7.5% Net assets value per share 516p 407p 428p 409p Earnings/ (loss) per share - continuing 120.2p (5.5)p 38.7p 26.1p Dividend per share 12.0p 12.0p 22p*** 12.0p Investment property GBP8.9m GBP5.0m GBP2.2m GBP3.2m acquisitions Investment property GBP2.2m GBP5.8m GBP4.0m GBP1.2m disposal 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 10p per share special dividend
Business Review
2017 has been an exceptionally good year financially. Group turnover is now rental income only and does not include trading turnover derived from MRG Systems Ltd ("MRG") which was sold in the year. The 2016 consolidated income statement has been restated to remove the results of MRG. Rental income has held up in a tough environment for retailers which is pleasing as a large proportion of our tenants are retailers, however we benefit from having more neighbourhood parades which are usually convenience, service or leisure led, which have been less affected by changes to consumer habits, as well as diversification from light industrial and office units.
Our cost of sales has increased, as we incurred one-off fees on Birmingham (Holloway Head) and a partly un-provided fine relating to Ramsgate (these combined total circa GBP300,000), as well as having higher service charges due to our shopping centres purchased which will be ongoing (an increase of circa GBP250,000).
The Income Statement also shows considerably higher 'other income', this includes the large surrender premium on Maldon (not spent on refurbishing the unit) of circa GBP1,400,000 and a large GBP400,000 fee to extend our Birmingham completion date.
The administration costs have reduced as there was a large one-off provision relating to Beale Ltd, a major tenant, last year which was not repeated in 2017.
The Group benefited significantly from improvements in the property market with the portfolio showing a very large GBP16.8 million uplift (2016 - GBP0.3 million uplift) following an independent valuation. The increases were mainly seen on our well let "wider" south east or city centre retail, industrial portfolio and our residential development schemes (either completed or sites with planning potential).
The year also saw disposal gains, including our entire share portfolio and good profits on investment properties. The interest rate swaps also recovered helping the overall profitability for the year, but not fully making up for last year's loss on this instrument.
MRG Systems Ltd ("MRG")
This was an associate company (at 45% ownership) since the 70's and latterly, in about 2005, it became a subsidiary when the founder exited the business, as such we had a very long-term investment in this trading business. MRG provide digital signage solutions with the majority of their supply still to the book maker market.
We tended to leave the business alone as it was not a familiar industry, assisting every now and then with either a small element of finance or property advice but the company was self-sufficient and didn't require much attention. We carried out an extensive exercise in 2014/2015 when the economy improved but were unable to find a purchaser.
Since then we have formalised our property relationship with them i.e. we let them their property on an FRI standard commercial lease. This property has been sold after the year end at just above its independent valuation (based on the 10 year lease entered into), but at a very good profit on our original purchase cost in 2013.
We have now sold the business to the management and employees of MRG and all but a few of them took this offer up. Panther still holds 15% of the issued share capital, as an investment and we of course wish them well for the future under its new employee ownership.
We received circa GBP150,000 from MRG in the year, mainly for our shares (GBP115,000), and a small management fee received intergroup (GBP35,000). We received rent of GBP93,000 on the property, which as mentioned above, was just sold for GBP900,000. Whilst this may not be the most exciting deal in the financial year, it was good for all parties, and simplifies our Group going forward, as well as generating some profit for our long-term hold.
Going forward
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.
Even through there are uncertainties going forward which may affect property prices, we will be protected by our portfolio's diversity, experienced management team and ability to adapt.
Financing
The Group 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. The loan had GBP0.5m available to draw at the year end, but currently is fully drawn. We plan to pay back some of our revolver using proceeds from the sale of Holloway Head, Birmingham if/ when it completes, which can be redrawn. The loan was also drafted with the option of increasing our facilities by a further GBP10 million (subject to banks approval).
At the statement of financial position date the Group had GBP5.9 million of cash funds.
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 GBP1.85 million (2016: GBP5.34 million fair value loss). Following this gain the total derivative financial liability on our Consolidated Statement of Financial Position is GBP26.4 million (2016: GBP28.3 million).
These financial instruments (shown in note 5) are our 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.
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, 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 950 individual units over 135 buildings/ locations. Secondary property also, very importantly, is much higher yielding which generally means the investment generates better interest cover and can cope with drops in rents or loss of tenants more easily.
Property risk
As mentioned above we invest in most sectors in the market to assist with diversification. Many people consider the retail sector to be currently in severe flux, considerably affected by changing consumer habits and of course the internet revolution. Of the Group's investment portfolio, retail makes up the largest sector being circa 60% by value at the last time that this was reviewed (please note our portfolio has changed a lot since this was last measured), therefore on the face of it we have a lot of exposure to this fast changing sector. 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 in these neighbourhood parades, means 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 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.
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 Act honourably, invest capital/ deal well and be prudent. flow reduced Regulatory Transactional Seek high returns changes and holding costs to cover additional increase costs. Lobby Government -"Ramblings". Use advisers when necessary. People related Loss of key employees/ Maintain market level issues low morale/ inadequate remuneration packages, skills flexible working and training. Strong succession planning and recruitment. Suitable working environment. Computer Loss of data, External IT consultants, failure debtor history backups, offsite copies. Latest virus and internet software. Asset management Wrong asset mix, Draw on wealth of asset illiquidity experience 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 24 April 2018 CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2017 Notes 31 December 31 December 2017 2016 Restated GBP'000 GBP'000 Revenue 12,946 12,965 Cost of sales (3,779) (3,012) Gross profit 9,167 9,953 Other income 1,905 466 Administrative expenses (2,105) (2,884) ----------------- ---------------- Operating profit 8,967 7,535 Profit on disposal of investment properties 1,071 458 Movement in fair value of investment properties 4 16,776 318 ----------------- ---------------- 26,814 8,311 Finance costs - bank loan interest (2,302) (2,472) Finance costs - swap interest (2,726) (2,625) Investment income 27 109 Profit (realised) on the disposal of available for 1,128 - sale investments (shares) Fair value gain/ (loss) on derivative financial liabilities 5 1,850 (5,338) Profit/ (loss) before income tax 24,791 (2,015) Income tax (expense)/ credit (3,490) 995 Profit/ (loss) for the year 21,301 (1,020) ================= ================ (Loss)/ profit for the period from discontinued operations (59) 67 ----------------- ---------------- Profit/ (loss) for the year 21,242 (953) ================= ================ Discontinuing operations attributable to: Equity holders of the parent (52) 50 Non-controlling interest (7) 17 (Loss)/profit for the year (59) 67 ================= ================ Continuing operations attributable to: Equity holders of the parent 21,301 (1,020) Non-controlling interest - - ----------------- ---------------- Profit/(loss) for the year 21,301 (1,020) ================= ================ Earnings/ (loss) per share Basic and diluted - continuing operations 120.2p (5.5)p Basic and diluted - discontinued operations (0.3)p 0.3p ================= ================ CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2017 31 December 31 December 2017 2016 GBP'000 GBP'000 Restated Profit/ (loss) for the year 21,242 (953) ----------- ----------- Other comprehensive income Items that may be reclassified subsequently to profit or loss Movement in fair value of available for sale investments (shares) taken to equity 279 87 Realised fair value on disposal of available for sale investments (269) - (shares) previously taken to equity Deferred tax relating to movement in fair value of available for sale investments (shares) taken to equity (53) (15) Realised tax relating to disposal of available for sale investments 51 - (shares) previously taken to equity Other comprehensive income for the year, net of tax 8 72 Total comprehensive income/ (loss) for the year 21,250 (881) =========== =========== Attributable to: Equity holders of the parent 21,257 (898) Non-controlling interest (7) 17 21,250 (881) =========== =========== CONSOLIDATED STATEMENT OF FINANCIAL POSITION Company number 00293147 As at 31 December 2017 Notes 31 December 31 December 2017 2016 ASSETS GBP'000 GBP'000 Non-current assets Plant and equipment 54 63 Investment properties 4 201,825 176,489 Deferred tax asset - 1,140 Available for sale investments
(shares) 17 908 201,896 178,600 ----------- ----------- Current assets Inventories - 57 Stock properties 448 736 Trade and other receivables 3,677 4,020 Cash and cash equivalents (restricted) - 1,017 Cash and cash equivalents 5,941 3,870 10,066 9,700 ----------- ----------- Total assets 211,962 188,300 =========== =========== EQUITY AND LIABILITIES Capital and reserves Share capital 4,437 4,437 Share premium account 5,491 5,491 Treasury shares (213) - Capital redemption reserve 604 604 Retained earnings 80,893 61,747 Attributable to equity holders of the parent 91,212 72,279 Non-controlling interest - 96 Total equity 91,212 72,375 ----------- ----------- Non-current liabilities Long-term borrowings 74,270 69,769 Derivative financial liability 5 26,400 28,250 Deferred tax liabilities 1,183 - Obligations under finance leases 7,552 6,769 ----------- ----------- 109,405 104,788 ----------- ----------- Current liabilities Trade and other payables 10,945 10,721 Short-term borrowings 159 150 Current tax payable 241 266 ----------- ----------- 11,345 11,137 ----------- ----------- Total liabilities 120,750 115,925 ----------- ----------- Total equity and liabilities 211,962 188,300 =========== ===========
The accounts were approved by the Board of Directors and authorised for issue on 24 April 2018. They were signed on its behalf by:
A.S. Perloff
Chairman
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2017
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 2016 4,437 5,491 - 604 65,485 76,017 Total comprehensive income - - - - (898) (898) Dividends - - - - (2,840) (2,840) 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 31 December 2017 4,437 5,491 (213) 604 80,893 91,212 ======== ======== ========= =========== ========= ======== CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2017 31 December 31 December 2017 2016 Restated GBP'000 GBP'000 Cash flows from operating activities Operating profit 8,967 7,536 Depreciation charges for the year 9 90 Decrease in stock properties 124 - Rent paid treated as interest (528) (514) Profit before working capital change 8,572 7,112 Decrease in receivables 302 478 Increase/(decrease) in payables 293 (383) ----------- ----------- Cash generated from operations 9,167 7,207 Interest paid (4,324) (4,342) Income tax paid (1,194) (360) ----------- ----------- Net cash generated from continuing operating activities 3,649 2,505 ----------- ----------- Net cash (used in)/ generated from discontinued operating activities (35) 159 ----------- ----------- Cash flows from investing activities Purchase of plant and equipment (10) (8) Purchase of investment properties (8,870) (539) Purchase of available for sale investments** - (85) Corporate acquisition (net of cash received) - (4,497) Corporate disposal (net of cash sold) (12) - Proceeds from sale of investment property 2,239 5,793 Proceeds from sale of available for sale investments** 2,046 - Dividend income received 21 103 Interest income received 6 6 ----------- ----------- Net cash (used in)/ generated from investing activities (4,580) 773 ----------- ----------- Cash flows from financing activities Repayments of loans (159) (1,655) Loan arrangement fees and associated costs - (442) Purchase of own shares (213) - Draw down of loan 4,503 2,000 Dividends paid (2,111) (2,840) ----------- ----------- Net cash generated from/ (used in) financing activities 2,020 (2,937) ----------- ----------- Net increase in cash and cash equivalents 1,054 500 Cash and cash equivalents at the beginning of year* 4,887 4,387 ----------- ----------- Cash and cash equivalents at the end of year* 5,941 4,887 =========== ===========
* Of this balance GBPnil (2016: GBP1,017,000) is restricted by the Group's lenders i.e. it can only be used for purchase of investment property.
** Shares in listed and 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 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 2017 or 2016. The financial information for the year ended 31 December 2016 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 2017 is derived from the audited statutory accounts for the year ended 31 December 2017 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 the year the Group entered into a sale agreement to dispose of MRG Systems Limited. 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.
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:
2017 2016 GBP'000 GBP'000 Special dividend for the year ended 31 December 2015 of 10p per share - 1,776 Final dividend for the year ended 31 December 2016 of 9p per share (2015: 3p per share) 1,227 532 Interim dividend for the year ended 31 December 2017 of 5p per share (2016: 3p per share) 884 532 2,111 2,840 ========= =========
The Directors recommend a payment of a final dividend, for the year ended 31 December 2017 of 7p per share (2016 - 9p), following the interim dividend paid on 29 November 2017 of 5p per share. The final dividend of 7p per share will be payable on 5 September 2018 to shareholders on the register at the close of business on 3 August 2018 (Ex dividend on 2 August 2018).
Also announced in mid-April 2018, we are paying a special interim dividend of 10p per share payable on 18 May 2018 to shareholders on the register at the close of business on 27 April 2018 (Ex dividend on 26 April 2018). This special dividend is in relation to year ending 31 December 2017.
The full ordinary dividend for the year ended 31 December 2017 is anticipated to be 22p per share, being the 5p interim per share paid, the 10p special dividend per share and the recommended final dividend of 7p 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 GBP21,301,000 (2016 - a loss of GBP970,000) and on 17,715,199 ordinary shares being the weighted average number of ordinary shares in issue during the year (2016 - 17,746,929). There are no potential ordinary shares in existence. The Company holds 63,460 ordinary shares in treasury.
4. Investment property Investment Properties GBP'000 Fair value At 1 January 2016 176,133 Additions 539 Acquisition of subsidiary 4,462 Disposals (5,335) Transferred from stock properties 255 Fair value adjustment on property held on operating leases 117 Revaluation increase 318 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 803 Revaluation increase 16,776 At 31 December 2017 201,825 ============== Carrying amount At 31 December 2017 201,825 ============== At 31 December 2016 176,489 ============== 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.
2017 2016 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 (489) (654) Floating element HSBC Bank plc 14,501 9,997 Natwest Bank plc 417 576 ------- ------- 74,429 69,919 ======= =======
Bank loans totalling GBP60,000,000 (2016 - 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 2017 2016 amount rate of contract Fair Fair remaining value value GBP'000 'years' GBP'000 GBP'000 Derivative Financial Liability Interest rate swap 35,000 5.06% 20.69 (22,831) (23,610) Interest rate swap 25,000 4.63% 3.92 (3,569) (4,640) (26,400) (28,250) ========= ========= Net fair value gain/ (loss) on derivative financial assets 1,850 (5,338) ========= =========
* 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 January 2018 the Group sold Marine Terrace, Margate for GBP450,000, which had a recently independently valued book value of GBP250,000 at the year end.
The Group placed three properties in an auction in February 2018, 1) MRG's office, The Mill, Stonehouse, 2) 19 Queen Street, Ramsgate, and 3) High Street, Dudley, as separate lots for a combined value of GBP1,323,000, which have exchanged and completed in April 2018. These had a combined book value, following the recent valuation, at the year-end of GBP1,115,000.
In March 2018 the Group exchanged on a private treaty disposal of our vacant shop and office complex in Stockport for GBP900,000, which was independently valued at the year-end to GBP435,000.
In March 2018, the purchaser of our Holloway Head property, in Birmingham, approached us to further extend their completion date, by agreeing a further GBP40,000 per week, of which they paid GBP80,000 up front in March 2018 with the additional extra to be collected at exchange. This has been delayed again and we hope that it will now complete at the end of July 2018. Due to the uncertainty, and as the completion has been delayed three times, and our contract is with a company with no real financial strength, set up especially to buy the property, we have not included the disposal within our figures.
In April 2018 the Group exchanged on a private treaty disposal of our freehold of St Nicholas House, Sutton, jointly with our tenants who have a long-leasehold interest, for GBP12,750,000. Our share of the proceeds is GBP7,837,500 before costs. Our book cost, which was independently valued at the year-end to GBP5,540,000, but of course does not take account of the marriage value which is achieved by selling with our tenant's interest.
7. Copies of the full set of Report and Accounts
Copies of the Company's report and accounts for the year ended 31 December 2017 will be posted to shareholders shortly, and will 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.
+44 (0) 1707 Panther Securities PLC 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 company news service from the London Stock Exchange
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