TIDMPNS
RNS Number : 1164J
Panther Securities PLC
25 April 2022
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 ("MAR"). With the publication of this announcement,
this information is now considered to be in the public domain.
Panther Securities P.L.C. ("the Company" or "the Group")
Final results for the year ended 31 December 2021
CHAIRMAN'S STATEMENT
I am pleased to present the results for the year ended 31
December 2021 which shows a profit of GBP15,922,000 before tax
compared to a profit of GBP2,573,000 before tax for the previous
year ended 31 December 2020.
Of course, once again the figures are substantially affected by
the movement in our swap liabilities amounting to a reduction of
GBP16,754,000. A large part of the improvement being due to the
market expectation of future higher interest rates at 31 December
2021, compared to those anticipated at 31 December 2020.
Even if the balance sheet benefit of interest rate rises are
excluded, our underlying business improved, with our operating
profit for the year under review amounting to GBP7,701,000 compared
to GBP6,704,000 for the previous year ended 31 December 2020 when
we had the bulk of the problems of Covid related reliefs and tenant
failures which we had to deal with and absorb.
Additionally, this year our property management costs increased
by GBP1,169,000. Just under half were extra holding and repair
costs of the vacant properties we received back following the
Beales business failure, some of which properties have now been let
or sold. Legal costs were over GBP300,000 higher, substantially due
to the costs imposed on the Group by our lenders to confirm the
charging arrangements for the refinancing of properties already
charged to our lenders.
Our bad debt charge was much reduced to GBP286,000 from the
GBP1,629,000 charged last year when the tenants' problems relating
to the pandemic were unknown and financially not easily
quantifiable.
Rents Receivable
Rents receivable for the year ended 31 December 2021 were
GBP13,172,000 compared to the previous year's GBP13,051,000. This
was despite loss of rent of GBP133,000 due to the disposal of
factories at Wembley and our largest tenant vacating Maldon
warehouse during the last two months of the year.
Disposals
There were a number of significant disposals during the year
which produced a total profit of GBP701,000 on sales of
GBP15,841,000, seemingly a low profit margin but the properties had
been independently re-valued for the lenders in December 2020 and
July 2021.
Fourth Way, Wembley
Four older style freehold factories producing GBP254,000 p.a.
sold for GBP8,700,000. The remaining part of our estate in Fourth
Way, Wembley was retained, producing GBP249,750 p.a. and comprises
seven more modern single storey factories totalling 15,783 sq. ft.
and held on a ground lease where the rental payable to our
freeholders is 25% of rental value, reviewed every five years.
37/39 Market Place, Great Yarmouth
An ex-Beales store (previously Palmers)
The vacant freehold was sold to Great Yarmouth Borough Council
for GBP1,325,000 which showed a profit on book value. We have
retained the freehold of the 70 space adjoining car park which is
managed by Great Yarmouth Borough Council, on our behalf, which in
pre-pandemic years had produced over GBP65,000 p.a.
West Molesey
This freehold 36,000 sq. ft. older style factory situated on a
one acre site was sold for GBP3,900,000 (at book value). It was let
at GBP267,000 p.a. but with the tenant expected to vacate at the
end of their lease in June 2022.
Mansfield
This former Beales store, now vacant, with approximately 150,000
sq. ft. of multi storey department store space in need of complete
redevelopment or refurbishment, was sold to Mansfield District
Council. This is to be a major part of their town centre
rejuvenation project.
We received GBP1,500,000 against its book value of GBP1,650,000.
We retained the part of the former Beales store that is part of the
Four Seasons Shopping Centre, the main shopping centre for the
town. This a modern centre and our building contains 27,000 sq. ft.
This adjacent scheme will in due course improve our property as the
town centre rejuvenation takes place. Our interest is a virtual
freehold at a nominal ground rent.
The Quadrangle, Glasgow
We have contracted to sell our site/building at The Quadrangle,
Glasgow, which sits on a corner site of 94,000 sq. ft. on the canal
and is ideal for a social housing development. The price agreed is
GBP1,250,000, subject to planning which should be received this
year. We received a GBP100,000 deposit with GBP65,000 released to
us on exchange as non-refundable.
60 High Street, Sittingbourne
This shop property was sold in May to the tenant for GBP450,000.
We provided a loan of GBP350,000 secured on the property to assist
the tenant's purchase. We charged a high rate of interest and
shortly before the year end the tenant paid off GBP150,000 thus
leaving GBP200,000 outstanding due for repayment in May 2023 (post
balance sheet date a further GBP75,000 paid).
Acquisitions
In January 2021 we exchanged contracts to purchase a substantial
freehold factory and warehouse in Trowbridge, Wiltshire, of
approximately 96,000 sq. ft. of usable space situated in
approximately six acres of industrial land. This property is
situated on one of the best industrial estates in Trowbridge where
demand should be good. The contract price agreed is GBP3,300,000
with a delayed completion of between 15 and 30 months depending
upon timing of the completion of the vendors' new building. Should
it be necessary for a further delay, the vendors have agreed to pay
a rent of GBP340,000 p.a. until they vacate.
This purchase will further diversify our portfolio by adding
this industrial investment. The spread and variety of rental
streams within our portfolio helped us to pass through the pandemic
with relatively few issues.
Completion is now expected in June 2022 and we have already
received approaches for the property, some to purchase, but we
would prefer to let the property and retain as an investment as
with a 9 metre eaves height and good circulation and loading
facilities, it should have a premium rental value.
Developments
Broadstairs
At long last this development is finished, with Tesco trading
successfully in the shop unit since June 2021 and all twelve flats
will shortly be fully let on assured shorthold tenancies and
producing a combined total rent of GBP185,000 p.a. This is a
quality addition to our portfolio.
Swindon
The problems with regard to the council's requirements for this
scheme have nearly been resolved allowing us to move forward
shortly with the planning permission. The redevelopment of this
site in the centre of Swindon will soon proceed to the next
stage.
Barry Parade, Peckham Rye
This potentially attractive scheme is still delayed by the
council's ever changing and increasing costly requirements. We are
still working on our appeal to take it out of the intransigent
council's hands.
Peterborough
The former Beales store in Peterborough, currently partly
occupied by New Start 2020 Limited, trading as Beales, is in the
final stages of preparation prior to submitting a planning
application for a large mixed-use development of shops/offices and
125 residential units whilst retaining a substantial part of the
existing attractive Edwardian brick building façade. The current
older style department store contains approximately 145,000 sq. ft.
of space unsuitable for current retail markets.
Tenant Activity
During the year we also let or renewed circa 110 tenancies - the
overall movement in the annual rent roll (letting and losses)
resulted in a reduction of approximately GBP664,000. This decrease
was primary due to the loss of our tenant in Maldon in November
2021 which had a negative effect on the rent of GBP600,000 p.a. but
was offset by two new factory lettings at Tenbury Wells at rents
totalling GBP170,000 p.a. The Tenbury Wells letting was
particularly pleasing as these factories had been vacant for a
number of years.
In addition to the above reduction in annual letting income, we
provided approximately 30 tenants concessions to assist where
possible at a total cost of GBP230,000 for the year (however these
are one off short term concessions and not permanent adjustments to
our rental income).
Fortuitously in March 2022 about four months after vacating, our
former tenants at Maldon had their trading situation pick up
sufficiently to re-rent the Maldon warehouse at GBP800,000 p.a.,
GBP150,000 p.a. higher than their previous rent. These additional
rent benefits will be shown in our 2022 accounts.
As such if one adds back the Maldon annual rent lost in 2021 (as
it was relet at a higher rent in early 2022), the headline annual
rent roll was effectively pretty flat for the year, which is a good
result given that the letting market in 2021 was again overshadowed
by COVID-19.
Beales Stores
I have already mentioned the planning exercise for Peterborough,
the sale of Great Yarmouth and Mansfield, and the lettings of part
of the stores at Keighley and Beccles, plus fully letting Skegness
in 2020. There are also a number of negotiations on parts of other
former Beales stores, some of which may come to fruition soon.
Post Balance Sheet Events
Since the year end, as mentioned above, we re-let the Maldon
factory at GBP800,000 p.a. (mentioned above) and we have exchanged
a conditional contract for the sale of the vacant freehold shop and
upper part in Clayton Street, Newcastle Upon Tyne for GBP940,000
which is above book value.
Staff
I have to give special thanks to all our staff who had to work
another year with much more complicated arrangements due to Covid
restrictions which caused problems for many of our tenants and
consequently extra management time on our portfolio.
Loans
On 16 July 2021 we finally completed our refinance which
consisted of a GBP66,000,000 loan for a three year period as a club
facility jointly lent by HSBC and Santander. The loan has a term
element of GBP55,000,000 and a more flexible revolving element of
GBP11,000,000 which gives us the ability to pay down and redraw
over the three year term.
The GBP66,000,000 was fully drawn but with the net proceeds from
disposals we repaid our revolving facility.
The new loan is a more conservative facility agreement than we
are used to with a headline loan-to-value covenant of 55%, when
historically it had been around 65% (which used to be considered
conservative!). The extra cautious nature shown by the lenders is
also reflected by the smaller loan facility arranged (previously we
borrowed GBP75,000,000 which is now GBP66,000,000).
The Banks also increased the margin from 1.95% to 2.70%.
However, on 1 December 2021 we had a prearranged reduction in our
fixed rates on GBP25 million of our loan, the saving in lower fixed
rates being a bigger offset than the increase in costs from the
higher loan margins now current.
Even though this was a much tougher and less generous
refinancing, we appreciated our lenders' position and do not take
their continuing support for granted. We have had a very amicable
banking relationship with HSBC for nearly 40 years and Santander
for over 10 years. This refinancing was the third iteration of this
joint club loan.
Swap restructuring
In February 2021, the Group paid GBP5 million to vary a
long-term swap agreement. The agreement varied was an interest rate
swap fixed at 5.06% until 31 August 2038 on a nominal value of
GBP35 million and has circa 16.5 years remaining. Following the
Group's variation, the Group's fixed rate will drop on 1 September
2023 to 3.40% saving the Group GBP581,000 p.a. in cash flow until
the end-point of the instrument.
Charitable Donations
In March 2022, the Group donated GBP20,000 to the Daily Mail
Ukrainian appeal. We also made our other regular donations in the
year including GBP10,000 to Land Aid and other smaller
contributions being mainly adverts within charity programs or
diaries.
Dividends
We paid a 6p share interim dividend for the year ended 31
December 2020 on 2 July 2021, and a further 6p per share final
dividend for that year on 14 October 2021. We paid an interim
dividend of 6p per share on 9 February 2022 for the year ended 31
December 2021.
Subject to shareholder approval at our Annual General Meeting on
15 June 2022, the final dividend of 6p per share will be payable on
20 July 2022 to shareholders on the register at close of business
on 1 July 2022 (ex-dividend on 30 June 2022).
Prospects
It is now 50 years since I, my brother and Malcolm Bloch, took
over the tiny, publicly quoted Levers Optical Co Ltd in 1972, which
we turned into Panther Securities PLC, a successful property
company that has continuously paid dividends (and where appropriate
special dividends) for the last 40 years, so much so that I
personally have not had the necessity to take a salary or receive a
pension contribution for over 16 years and 25 years
respectively.
In last year's accounts I announced that Simon Peters would be
taking over as Chief Executive Officer, but I would continue as
Chairman. This will allow me to extend my weekend to include
Fridays, which will give me more time for my personal
interests.
We have a loyal and experienced team that continue to perform
successfully. It is worth repetition that our widespread portfolio
of different types of properties, mostly producing rental income
and many with development potential, provide a safe cover for all
our interest payments and management costs.
We also have excellent relationships with our bankers,
accountants, solicitors, agents and all other professionals needed
to operate a widespread property business.
Thus, as always, I look forward to the Group's continuing
success.
Finally, I repeat my thanks to 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.
Special thanks and good wishes to our tenants and I hope they are
able to overcome the present troubled environment and make a full
and profitable recovery.
Andrew S Perloff
CHAIRMAN
22 April 2022
CHAIRMAN'S RAMBLINGS
We often buy properties or enter into transactions with people
we have dealt with before, many of them friends who we know and
trust. On one occasion a few years ago, I was buying a property
from a friend. When he provided me with the information required, I
began checking all the details and relevant matters. He was a
little put out and asked "Don't you trust me? Do you think I would
lie to you?". I replied, "Of course I trust you but let me tell you
a story", which I recount now.
When I was young and fancy free, I had a small group of close
friends, one of whom, like me, had more flexibility with his
holiday arrangements.
In 1967, when we were both 23, we decided to take a holiday in
Southern Spain and to make it more exciting would drive there in my
Triumph Herald convertible, both taking turns to drive. My friend
somehow had found and booked a tiny one-bedroom bungalow right on
the beach at Torremolinos. The journey took 3 days, overnighting at
Biarritz and Madrid before continuing down the centre of Spain.
This was before most motorways and other than the towns, we
encountered little traffic and thus it was a great drive on long
straight tree lined roads in France. In Spain, I seem to recall the
roads were good for some miles out of major towns but then, without
notice, suddenly they were without a tarmac surface. However, the
journey is not the story!
We had a wonderful time being on a hot, clean beach with the
all-day sun and warm sea and many, many other young holidaymakers,
also out for a good time. Surprisingly the cottage, although
furnished but dated, was perfect with working cooking facilities
even we were capable of using! The sun shone every day, and so it
should in Southern Spain in early September.
My friend would always come up with ideas and suggested a day
trip whereby we could drive to Malaga and catch a ferry to Tangier
which was about a four hour crossing. This sounded exciting so one
day we drove to Malaga very early and parked for free in the
harbour car park. When we walked up to buy ferry tickets I began to
have doubts when I saw the age and small size of the ferry boat.
Expressing my fears, my friend reassured me with his expert
knowledge of the sea and weather (as he was a keen fishing
enthusiast). "Look how sunny and calm the water is, it's only about
35 miles away and because the Mediterranean is an enclosed sea with
land all round, it won't ever get rough". With this logical
explanation, my fears gone and feeling reassured, we bought our
tickets and boarded the ferry with about 100 other travellers.
My friend was correct. It was a beautifully smooth crossing and
we stood on the deck and watched flying fish and a pod of dolphins
follow alongside the boat for half the journey. We arrived safely
on time at the port in Tangier where a guide waiting for tourists
convinced us that for a few dirhams he would show us round the
Kasbah and the modern town for most of the 6 hours we were
there.
About 5.00 pm we caught the ferry for our return journey. As we
boarded we noticed there was some light rain. There were also fewer
people on the return journey but we were relaxed and happy to sit
on one of the on deck deckchairs. As soon as we were out of the
harbour the seas became more choppy but not enough to worry me.
An hour or so out and already dark, the water became much
rougher with torrential downpours of rain and lightning in the
distance gradually getting closer. Most of the passengers on deck
went downstairs whilst crewmembers collected deckchairs and put
them in secure trunks chained to the deck. The sea grew rougher
with 25 ft waves and the boat rose high up and down with the swell.
I was petrified but stayed on deck thinking if the boat sank I
could at least float on a deck chair! My friend turned green and
went downstairs! I faced my expected demise, with thoughts of all I
would miss out on but after another two hours of rocky seas and bad
weather, drenched to the skin (the rain was warm), I could see the
lights of Malaga and was overcome with relief when we made it into
the much calmer harbour. Shortly afterwards, we disembarked with
many of the passengers making the sign of the cross as they stepped
off the boat onto land. I nearly converted and joined them in their
thanksgiving prayer but instead I wobbled unsteadily on my feet
until I reached my car. That night we slept better than ever
before, and probably since!
The holiday was fast ending so after a whole day on the beach
with clear blue skies and sunshine, followed by a late night out at
a crowded dancing and drinking club, we drove back to our beach
cottage and parked on a small side road, about two hundred yards
away. I suggested we could put the hood up but as it took a while
to erect and we were tired, I asked my friend if we should leave it
open as the sky was clear, without a cloud in sight, the weather
hot and I asked him if he thought it might rain. He said it was
very rare for it to rain in Torremolinos in September and as there
had been a storm and heavy rain the previous week it was unlikely
to rain again. With his sage advice we went home to bed.
About 6.30am I woke up to rattling on the roof. We realised it
was rainfall, looked out of the door and it was bucketing down. We
had no rainwear so hoped it would stop soon and as the car was
probably already very wet, there was little we could do. We went
back to sleep until after 10am. When we arose we were correct in
our assumption as the sun was shining and it was beautiful
outside.
We walked to the car and found the passenger section contained
over 1 foot of water and looking like a small garden pool, we
opened the doors and the top nine inches of water flooded out. We
then went back to the cottage to fetch saucepans and frying pans
which we used to bail out the rest of the water. We pulled out all
the floor carpeting and left it on the wall for the sun to dry it
out. Once we had done all we could to remedy the situation, I tried
to start the car. It started immediately which was a great relief
as we were due to leave 2 days later.
The sun stayed bright and hot for the rest of our holiday and
the carpets dried out but the car stank of damp carpet which we had
to put up with for the three day drive home, and it smelt for many
months afterwards.
The moral to these stories was that my friend had never and
would never have deliberately lied to me but his knowledge and
information was wrong and over the years I began to realise that
you should always check information given to you which you need to
rely on, even if given by an absolutely trustworthy and honest
friend.
Of course, there was a further related story to crystallise and
embed my thoughts on careful investigation.
About twelve years after my Spanish holiday, my business was
still recovering from the property crash of the mid-seventies and
therefore we were trading properties for quicker profits rather
than buying for long-term investment.
One of our most trusted agents approached us with an attractive
deal. One of his other clients had contracted to buy a portfolio of
29 freehold, very secondary separate shops spread out amongst many
Northern towns. The total contractual price was GBP125,000 and
produced a good rental. The client was a one-man operator and felt
it was too much work for him to deal with the entire portfolio so
the contract was offered to us for GBP5,000.
Speed was essential so we signed up within days even though we
did not have time to physically view any of the properties, but we
had the individual photos and tenancy details which had been
checked by his solicitors.
We took on the project with gusto for selling on the individual
properties to friends and clients.
A close friend purchased two separate shops, one in a small town
called Ossett let to a local baker, thus giving us a GBP2,500
profit, he too taking our details and photos as correct and with a
view to putting one of the properties up for sale by auction after
an imminent rent review had been agreed.
Prior to the auction, his surveyor viewed the property to
negotiate the rent review. To his surprise, and ours, the photos of
the property, which showed a nice small shop with a van outside
with the baker tenant's livery clearly shown on its side, were not
outside the correct property.
Our property was round the corner in a lesser quality position.
It became obvious that the photographer had taken the photo and was
fooled by the firm's van being parked on the main road as it could
not easily park outside the actual property because of a one-way
system. The surveyor was most disturbed by the error as the shop
tenant was a butcher who was so indignant that he chased him out
waving a butcher's cleaver!
The property went to auction with correct photos, the other
details unchanged, and I was pleased to see my friend made a
reasonable profit. Therefore, everyone concerned was happy. So
properly checking facts became well embedded in my thoughts, even
when dealing with honest and trustworthy friends.
In previous ramblings I have mentioned over my many years in
business that I have come across numerous M.P.s and, of course, my
conversations usually turn to business and its problems, caused by
ill thought out legislation and excessive or illogical taxes.
They have invariably all seemed sympathetic and promised to look
into the problems to try and help.
The one common conclusion I came to was that none had any
intimate understanding of how businesses worked or fully understood
the ramifications or unintended consequences of their legislation,
and this seemed to be due to their lack of working outside of the
bureaucratic government bubble.
It was obvious that they relied on civil servants to produce the
information they required to guide reformative legislation.
It is generally known that government taxation has destroyed the
department store sector. This sector has been so beneficial to our
country for over a hundred and fifty years and was one of the
backbones of the free enterprise and capitalist system. This sector
of retailing provided the anchor to the high street, and thus the
surrounding community, providing easy accessible and flexible
employment for the many hundreds of thousands of youngsters who are
not wanting a full-time working and lifetime career, mainly young
women, many who do not want to have full-time education for a
further 3 years and be loaded with student loan debt.
For a number of years I have argued the absurdity of the current
business rates system failing to change with the retail markets'
technological advances which gave terrific financial advantage to
new business that could operate without a large property presence
and much reduced staff levels.
The existing system, built on rental values, had a substantial
safety valve built in by having values revalued every five years.
However, constant gerrymandering of the system has substantially
killed off the department store sector and debilitated the high
street. The mistakes began to accentuate when they deferred the
revaluation in 2015 by two years, "an obviously stupid mistake".
This caused the already out of kilter values to become more
lopsided for another two years so they then brought in a phasing
system which only a moron could have devised.
This made those traders who desperately needed and were entitled
to very large reductions by virtue of the lower trading and rental
values of their premises to only receive a 5% annual reduction
(even if the calculations showed a 50% reduction was the
appropriate figure) whilst those who were doing very well only paid
a token increase, with this paltry reduction as reduced by an
inflation linked upward adjustment every year.
Many retailers did not receive the correct full reduction before
the next revaluation was due. The department store sector, with
many previously successful retail businesses collapsed into
Receivership etc., helped along by forced closures because of the
COVID-19 pandemic. To top it all, the government then deferred the
revaluation a further two years.
I believe it was Einstein who said "To repeat an experiment or
action and expect a different result is the first sign of
madness".
I have just read that the government have announced that they
will introduce new laws to allow local authorities to
compulsorily/force landlords of shops vacant for over 6 months to
rent out to the highest bidder chosen by them.
There will be monumental hurdles to overcome, i.e., who pays for
repairs, who is responsible if rent or rates are not paid? How long
will lease lengths be forced upon reluctant landlords and what if a
property is being held for development, will there be compensation
for landlords loss of value? Will banks be precluded from calling
in loans secured upon the property if the values falls?
This is gesture politics to shift blame for government
incompetence to blameless landlords.
As government policies are sometimes so shortsighted, I can't
help feeling that some of the anonymous civil servants have a
deliberate agenda to undermine the free enterprise and capitalist
system. Thus their long salami style regulations and taxation
attacks, and now proposed extra compulsory costs put upon Landlords
and the business community, is deliberate by people either in the
pay of communist governments or supporters of Marxist regimes.
At my grammar school, I was not an attentive pupil and there was
much I regret. I did not put much effort into lessons, but for some
teachers it paid to pay more attention and keep alert. One such
teacher was Mr Blake, the geography teacher, who had a tendency to
throw the blackboard rubber at pupils who were not paying
attention. This wooden backed sausage shaped cloth was often used
as a well-aimed missile, which often hit its mark.
In one lesson, which I recall was about our country's mineral
resources, I was not concentrating, thus the well-aimed missile
suddenly flew towards me, I ducked and it hit the boy behind me
causing much class amusement. I was then forced to listen to his
repeat of what he was trying to instil in us all, that the UK would
never be short of energy because most of our country sat on vast
beds of coal which triggered the Industrial Revolution and made
Great Britain an industrial powerhouse.
So now some sixty years later, I am wondering was he wrong, what
happened to all these vast energy resources which had been
augmented by the discovery of vast reserves of North Sea oil and
gas and in recent times with new technology giving us the ability
to release huge gas reserves still trapped in rock strata beneath
our soil?
Currently, our household energy costs are colloquially going
through the roof as well as literally. It is all down to central
government mistakes. Their legislation, i.e., MPs on information
provided by their largely anonymous advisors that most fuels create
carbon emissions and should be eliminated to protect our world from
dying because of global warming caused by man using these fossil
fuels. Our world has been evolving for billions of years, and even
if our government were correct in their assumptions, with the UK
only producing 1% of these global emissions, whatever measures they
take will make no noticeable difference.
If we need 1,000,000 tons of special type of coal for specialist
production, if we have to import it from a third world country
because we are legislatively prevented from digging up our own
coal, surely that creates additional carbon emissions for the long
distance transport involved.
This will be the same for oil and gas so why do we impoverish
our nation by shutting down our own production?
The reason once again is Gesture Politics. It sounds good to
protect the environment for our great grandchildren's future - IS
THE PRESENT FINANCIAL PAIN WORTH IT? Will further generations be
financially able or allowed to have families?
The result of our country's carbon reduction initiative is
extremely painful for most people, especially families at the lower
end of the income scale. Those in the middle will manage but will
find their existing living style needs to be lowered.
The price of energy was already rising disproportionately
because of our present governments green taxes and carbon reduction
policies.
This was probably one of the main reasons the Russian
dictatorship felt it could get away with invading Ukraine, which
besides creating misery for millions of people, and a huge refugee
crisis, caused a further increase in world energy costs, whilst
they knew they were self-sufficient, and how large parts of Europe
depended upon having Russia export oil/gas to them.
Russia has always been a rogue state and this outcome was
definitely foreseeable, and the risks could have been considerably
reduced if we had continued and expanded our self-generated, under
our feet energy capabilities, and especially fracking which could
produce quicker returns than other alternatives with little
environmental problems. Certainly fewer problems than an extra
4,000,000 refugees flooding Europe would cause, or being forced
into a ground war with Russia. Russia would inevitably be the
eventual loser of a war of which everyone would be losers.
The people of this country are paying a heavy financial price
for our government's incompetence and unfortunately listening to
the noisiest protestors who are a small minority, usually
financially protected from the worst of the financial pain
befalling upon the majority of the hard working, family orientated
population.
Yours
Andrew S Perloff
CHAIRMAN
22 April 2022
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 currently owns and manages over 900
individual property units within over 120 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
2021 2020 2019 2018
Gross profit margin (gross
profit/ turnover) 65% 73% 76% 71%
Gearing (debt*/(debt* + equity)) 36% 42% 41% 39%
Interest cover** 1.72 times 1.34 times 2.14 times 4.17 times
Finance cost rate (finance
costs excluding lease portion/
average borrowings for the
year) 7.5% 7.0% 7.1% 6.6%
Yield (rents investment properties/
average market value investment
properties) 7.9% 7.8% 8.8% 7.7%
Net assets value per share 553p 488p 480p 532p
Earnings/ (loss) per share
- continuing 76.4p 14.9p (23.1)p 39.9p
Dividend per share*** 12.0p 12.0p 12.0p 27.0p
Investment property acquisitions GBP0.5m GBP5.5m GBP8.1m GBP3.9m
Investment property disposal GBP15.8m GBP0.7m GBP1.1m GBP40.8m
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 (excluding lease portion)
*** Includes 2018:15p per share special dividend
Business review
The Group's underlying performance bounced back following the
negative effects of COVID-19 pandemic with the operating profits
being GBP1m stronger, this was despite more holding costs on vacant
properties resulting in a lower gross profit margin. This was
mainly due to a much lower bad debt charge being required in 2021
compared to that required for the year ended 31 December 2020
during the COVID-19 pandemic.
The property values improved slightly following an independent
valuation at the half year and a directors' valuation at the
year-end.
The most significant impact on the income statement was the
sizeable improvement of the swap liability (derivative financial
liabilities) by GBP16.8 million. The reduction in the liability is
approximately half due to our actions of paying a premium to exit
the swap and re-enter a new more beneficial arrangement for a GBP5m
premium at an estimated discount of GBP3.3m (this is explained in
more detail under Financing below). The remainder of the
improvement in our swap liability position is mainly in relation to
the change in market expectations of higher future interest rates
(leading to a lower liability).
The other main feature of 2021 was the large disposals
undertaken, this does not affect the profits significantly in the
income statement as the increase in values were recognised in the
2020 accounts (following the independent valuation at 31 December
2020), but now have been realised. It does however have a large
impact on cash flow generation. Therefore, even though the Group
showed GBP0.7m of profit it produced a significant GBP15.8m of
cash. There was a good mixture within the disposals, some a result
of the Group taking advantage of the booming market in industrial
properties but other disposals being vacant department stores, with
no income being lost.
The consolidated statement of cash flows, shows the cash
generated in the operating activities had improved to GBP2.98m
(2020 - GBP2.61m). The operating activities or underlying business
shows an even stronger improvement if the tax effect is stripped
out as we had to pay tax in 2021 but had a repayment in 2020.
In terms of the statement of financial position the Group saw
improvement in its asset value with the net asset value per share
now being 553p (2020 - 488p per share).
Through the many downward economic cycles and in particular, the
COVID-19 pandemic, the most important plank within the Groups
business plan is the balance within the portfolio between different
asset classes and its resulting diverse, resilient, income streams
these investments provide. Over the last couple of years, the
industrial properties and the secondary "local" retail investments
have performed the best in terms of growth in values and/ or
importantly in terms of income collection. We also benefit from
having properties with residential elements or planning potential,
mainly in the southeast. As explained in the 2020 annual report
(and worth repeating), we have seen that the secondary local
shopping parades hold up well in the pandemic. The traders in these
properties have managed to survive and some even flourish. As even
though lockdowns meant closures, many were considered essential and
most benefited from additional local footfall whilst people were
not commuting into major towns or city centres. We also saw our
smaller tenants adapt better and were more flexible in their
approach, as well as the government help being more meaningful for
covering their fixed costs.
We feel the pandemic has proven that our business model of
investing in a diversified selection of property investments rather
than specialising is the correct one and provided adequate income
for all our requirements.
It is still our view, as the economy opens up, that secondary
retail properties (which is a large part of our portfolio - over
half of our value) will be less affected by the seismic change to
shoppers' habits. The average secondary retail parade has a higher
proportion of businesses, which are providing non-retail offerings
even though they are shops.
This includes service providers, restaurants or take away use,
or convenience offerings, which are by their very nature less
affected than pure destination retail, or by changing consumer
habits, and in many instances, the Web even provides additional
opportunities i.e. being able to offer their take away services via
Just Eat etc. Even our more traditional high street or pure retail
positions are mainly large blocks in the centre of towns - which we
believe will benefit from longer-term regeneration plans from the
Government and local councils for town centres. As such, if and
when some retail locations become less viable, we believe we can
create value from these sites with planning permission to
eventually give them other uses or purposes. In the meantime, they
continue in the most part to be strong cash contributors providing
high returns on initial investment.
Going forward
We highlighted two issues that would impact 2020 in the 2019
report and accounts being COVID-19 (which has accelerated
structural changes in how businesses operate) and demise of Beales.
These two issues were the large factors in 2021 and will continue
to impact 2022 but less so. We are working our way repurposing the
former Beales properties, we have let some and sold two vacant
properties - the management team believe there is still a lot of
potential upside in the remaining properties. The down side in the
remaining vacant department store properties is already reflected
in their valuations, so we believe we can do well on this low base,
adding further long-term income, and making some capital profits on
disposal. We believe the external valuations are prudent but time
will be the true judge.
Following the disposals and repayment of a large part of
facility, we are de-geared and have significant cash for a Group of
our size. We are in a strong position to take advantage of
opportunities to buy in new investments but over the next couple of
years, we see proportionally more future benefit coming from within
the existing portfolio. The Group is aiming to unlock the value
contained within the portfolio, such as by obtaining planning
permissions on those with residential value and through lettings of
vacant space, including the former Beales properties.
The economy may be entering a higher interest and high inflation
environment. We have fixed interest swaps which will protect us
from any interest increases. On the inflation, the make-up of
property companies naturally protects the business as property
investments should go up in line with inflation whilst the loans
real value effectively decreases.
COVID-19
We believe as a board that we are through the worst of this now,
but even if there are more hurdles any resulting negative
situations will be less uncertain, we have a lower level of
borrowing, and strong cash reserves.
There are always uncertainties and COVID-19 was an extreme
example, uncertainties can affect property prices in the short
term, however the board continues to believe we are protected by
our portfolio's diversity, experienced management team, ability to
adapt and by having access to funds. We have low gearing levels,
supportive lenders and cash reserves.
Financing
The Group refinanced its facilities in the year and agreed a
GBP66 million facility for a three-year term from July 2021.
At the Statement of Financial Position date, the Group had
GBP13.4m of cash funds, GBP11m available within the loan
facility.
Financial derivative
We have seen a fair value gain (of a non-cash nature) in our
long term liability on derivative financial instruments of
GBP16.754m (2020: GBP5.498m fair value loss). Following this gain
the total derivative financial liability on our Consolidated
Statement of Financial Position is GBP15.3m (2020: GBP32.0m). The
Group's swap (financial derivatives) position is at its lowest
liability since December 2013.
In November 2021 a GBP25m swap finished which was at a fixed
interest rate of 4.63% and has been replaced by one at 2.01% which
will show a saving in interest costs of circa GBP654,000 per annum
compared to the historic position.
In February 2021 the Company paid GBP5,000,000 to vary a
long-term swap agreement. The agreement varied was an interest rate
swap fixed at 5.06% until 31 August 2038 on a nominal value of
GBP35m and has circa 17.5 years remaining. Following the variation,
the Group's fixed rate will drop on 1 September 2023 to 3.40%
saving the Group GBP581,000 p.a. in cash flow until the end point
of the instrument.
These financial instruments (shown in note 5) 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 mostly 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). We also use financial derivatives
(swaps) were appropriate to manage interest rate risk. 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. The
COVID-19 crisis also showed the resilience of the investments
income stream and the good management in particular the disposals
degearing the business made in 2018 and 2021.
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 900 individual
units and over 120 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. In addition 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.
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.
Acts of God (e.g. Weather incidents, Where possible cover with
COVID 19) fire, terrorism, pandemics insurance. Ensure the Group
carry enough reserves and
resources to cover any
incidents.
----------------------------- -------------------------------------
Section 172(1) statement
This is a reporting requirement and relates to companies defined
as large by the Companies Act 2006, this includes public companies
as otherwise the Group would not be considered large.
Each individual Director must act in the way he considers, in
good faith, would be the most likely to promote the success of the
company for benefit of its members as a whole, and in doing so the
Directors have had regard to the matters set out in section 172(1)
(a) to (f) when performing their duty under section 172.
The matters set out are:
(a) the likely consequences of any decision in the long
term;
The longer term decisions are made at board level ensuring a
wealth of experience and a breadth of skills. The value creation in
the business is mainly generated by buying the investments at the
right time in the financial cycles, whilst reducing risk by
choosing assets that have alternative or back up values to the
current use, as well as initial values. It is also key that long
term decisions are made in respect of ensuring that property assets
are maintained, where economically viable. Other areas to ensure
decisions are in tune with long term consideration are making sure
the best possible financing of the Group to match the requirements
of the long-term nature of property ownership. The board and
management makes long term decisions such as keeping a vigilant
review of the changing nature of property usage and tries were
possible to diversify its income streams. Caerphilly and Gateshead
were relatively more recent purchases are good examples of long
term decision making, i.e. choosing offices and a leisure led
retail scheme - as such giving some protection against changing
consumer habits in more general retail arena.
(b) the interests of the company's employees;
The company makes investment in and the development of talent of
its employees, including paying for professional development,
providing in house updates and encouraging knowledge sharing. The
Group has a strong track record of promoting from within the
business and in 2020 two surveyors were promoted to Joint Head of
Property. In 2021 the Finance Director was promoted to Chief
Executive. The Group undertakes team building activities to
encourage cohesion and working together.
(c) the need to foster the company's business relationships with
suppliers, customers and others;
Being in the secondary property industry the business is used to
dealing with many types of businesses as tenants from large
multi-national businesses to small sole traders - keeping good
sound relationships with both is key. We also use many small
operators and suppliers and we ensure prompt payment, paying within
30 days in most instances to again foster good working relations.
We set a purchase order system in 2018 and in 2019 replaced with a
new system this has been refined over the next few years to
streamline and speed up payments supporting small suppliers.
(d) the impact of the company's operations on the community and
the environment;
The Group's investments by its very nature often have a
significant impact on local communities, providing services and
convenience businesses, or places for local enterprise or
employment. Owning a parade of shops, we can ensure where possible
that these are viable locations by encouraging a variety of
offerings. The Group maintains and upkeeps its investment
properties to a viable level which benefits the local communities
they provide accommodation for or seeks improvements with planning
which can enhance local areas. The Group also ensures it recycles
much of its head office paper and is moving towards less paper
communication; since 2019 up to date our invoices have been emailed
as standard to our tenants and we also encourage the receipt of
electronic invoices. We have had a renewed push in 2021 to push our
last few tenants away from cheque payments. We also ensure we
upgrade our units to the required EPC levels which by its very
nature reduces the longer term environmental impact of the use of
these units.
(e) the desirability of the company maintaining a reputation for
high standards of business conduct;
The Group maintains an appropriate level of Corporate Governance
that is documented within its own section within these Financial
Statements. With a relatively small management team it is easier to
monitor and assess the culture and encourage the appropriate
standards. The board strives to delegate and empower its management
teams to ensure the high standards are maintained at all levels
within the business.
(f) the need to act fairly as between members of the
company.
The Group has excellent communication with its members, actively
encouraging participation and discussion at its AGMs and also
circulating letters of our announcements to ensure older members or
those not accessing the LSE financial news can keep up to date with
relevant information. Our Chairman is unpaid, his benefit or income
from the company is pro-rata the same as all members including
minority shareholders.
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 22 April 2022
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2021
Notes 31 December 31 December
2021 2020
GBP'000 GBP'000
Revenue 13,172 13,051
Cost of sales (4,651) (3,482)
Gross profit 8,521 9,569
Other income 958 467
Administrative expenses (1,492) (1,703)
Bad debt expense (286) (1,629)
---------------- ----------------
Operating profit 7,701 6,704
Profit on disposal of investment properties 701 150
Movement in fair value of investment
properties 4 961 6,146
---------------- ----------------
9,363 13,000
Finance costs - interest (2,322) (2,283)
Finance costs - swap interest (2,806) (2,726)
Finance costs - swap variation (5,000) -
Investment income 29 41
Profit on disposal of fixed assets - 1
(Loss)/profit (realised) on the disposal
of investments (96) 38
Fair value gain/(loss) on derivative
financial liabilities 5 16,754 (5,498)
---------------- ----------------
Profit before income tax 15,922 2,573
Income tax (expense)/credit (2,411) 71
Profit for the year 13,511 2,644
================ ================
Continuing operations attributable
to:
Equity holders of the parent 13,511 2,644
Profit for the year 13,511 2,644
================ ================
Earnings per share
Basic and diluted - continuing operations 3 76.4p 14.9p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
Notes 31 December 31 December
2021 2020
GBP'000 GBP'000
Profit for the year 13,511 2,644
----------- -----------
Items that will not be reclassified
subsequently to profit or loss
Movement in fair value of investments
taken to equity 18 55 (354)
Deferred tax relating to movement in
fair value of
investments taken to equity 25 (14) 67
Realised fair value on disposal of investments
previously taken to equity 18 148 -
Realised deferred tax relating to disposal
of investments previously taken to equity 25 (37) -
Other comprehensive income/ (loss) for
the year, net of tax 152 (287)
Total comprehensive income for the year 13,663 2,357
=========== ===========
Attributable to:
Equity holders of the parent 13,663 2,357
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Company number 00293147
As at 31 December 2021
Notes 31 December 31 December
2021 2020
ASSETS GBP'000 GBP'000
Non-current assets
Investment properties 4 167,384 180,975
Deferred tax asset 2,252 3,810
Right of use asset 298 335
Investments 292 614
170,226 185,734
----------- -----------
Current assets
Stock properties 350 350
Investments 29 29
Trade and other receivables 2,996 3,925
Cash and cash equivalents (restricted) 5,009 1,052
Cash and cash equivalents 8,343 8,166
16,727 13,522
----------- -----------
Total assets 186,953 199,256
=========== ===========
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 87,464 75,923
Total equity 97,783 86,242
Non-current liabilities
Long-term borrowings 6 55,513 51
Derivative financial liability 5 15,255 32,009
Leases 8,353 8,339
----------- -----------
79,121 40,399
----------- -----------
Current liabilities
Trade and other payables 9,018 9,361
Short-term borrowings 6 560 63,066
Current tax payable 471 188
----------- -----------
10,049 72,615
----------- -----------
Total liabilities 89,170 113,014
----------- -----------
Total equity and liabilities 186,953 199,256
=========== ===========
The accounts were approved by the Board of Directors and
authorised for issue on 22 April 2022. They were signed on its
behalf by:
A.S. Perloff
Chairman
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
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
2020 4,437 5,491 (213) 604 74,627 84,946
Total comprehensive
loss - - - - 2,357 2,357
Other movement - - - - - -
Dividends - - - - (1,061) (1,061)
Balance at 1 January
2021 4,437 5,491 (213) 604 75,923 86,242
Total comprehensive
income - - - - 13,663 13,663
Dividends - - - - (2,122) (2,122)
-------- -------- --------- ----------- --------- --------
Balance at 31
December 2021 4,437 5,491 (213) 604 87,464 97,783
======== ======== ========= =========== ========= ========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
31 December 31 December
2021 2020
GBP'000 GBP'000
Cash flows from operating activities
Operating profit 7,701 6,704
Loss on current asset investments - 87
Rent paid treated as interest (687) (687)
Profit before working capital change 7,014 6,104
Decrease/(increase) in receivables 929 (536)
(Decrease)/ increase in payables (48) 783
----------- -----------
Cash generated from operations 7,895 6,351
Interest paid (4,295) (4,160)
Income tax (paid)/ refunded (620) 420
----------- -----------
Net cash generated from operating activities 2,980 2,611
----------- -----------
Cash flows from investing activities
Purchase of investment properties (832) (5,538)
Purchase of investments** (6) (633)
Purchase of current asset investments*** - (2,804)
Proceeds of current asset investments*** - 2,855
Proceeds from sale of fixed assets - 1
Proceeds from sale of investment property 15,841 700
Proceeds from sale of investments** 435 631
Dividend income received 21 32
Interest income received 8 9
----------- -----------
Net cash generated / (used) in from
investing activities 15,467 (4,747)
----------- -----------
Cash flows from financing activities
Draw down of loan 6,000 4,000
Repayments of loans (12,057) (1,070)
Loan amortisation repayments (250) -
Swap variation (5,000) -
Loan arrangement fees and associated
set up costs (884) -
Dividends paid (2,122) (1,061)
----------- -----------
Net cash (used in)/generated from financing
activities (14,313) 1,869
----------- -----------
Net increase/(decrease) in cash and
cash equivalents 4,134 (267)
Cash and cash equivalents at the beginning
of year* 9,218 9,485
----------- -----------
Cash and cash equivalents at the end
of year* 13,352 9,218
=========== ===========
* Of this balance GBP5,009,000 (2020: GBP1,052,000) 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.
*** Shares in listed companies held for trading purposes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
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 will publish full financial statements that comply with IFRSs
which will shortly be available on its website and are to be posted
to shareholders shortly.
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the years ended 31
December 2021 or 2020. The financial information for the year ended
31 December 2019 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 but did include a reference to
matters to an emphasis of matter on the impact of COVID-19 which
the auditors drew attention to without qualifying their report and
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 2021 is
derived from the audited statutory accounts for the year ended 31
December 2021 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. 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.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman's Statement and Group Strategic Report.
The financial position of the Group, including key financial
ratios, is set out in the Group Strategic Report. In addition, the
Directors' Report includes the Group's objectives, policies and
processes for managing its capital; the Group Strategic Report
includes details of its financial risk management objectives; and
the notes to the accounts provide details of its financial
instruments and hedging activities, and its exposures to credit
risk and liquidity risk.
The COVID-19 pandemic has provided a much harder set of
circumstances for all businesses which the Group to date has
navigated successfully. The Directors have prepared detailed
financial forecasts to December 2024 assuming a significant
downward trend in its income base, increasing costs and higher
interest rates. The forecasted worst-case scenario demonstrated the
Group is a going concern even if the business was subjected to a
long downward spiral in its business activities. In summary, the
Group has enough financial resources to survive to beyond June
2023.
The Group is strongly capitalised, has high liquidity together
with a number of long-term contracts with its customers many of
which are household names. The Group has a diverse spread of
tenants across most industries and owns investment properties based
in many locations across the country.
The Group's main loans were renewed in July 2021 for a new three
year term. The Group has a strong track record of obtaining long
term finance and expects this to continue in the future as it has
supportive lenders. The Group always maintains excellent relations
with its lenders. The Lenders Covenants as at 31 December 2021 have
been reviewed and significant movements would be required before a
covenant was breached such as a 35% decrease in the secured
portfolio valuation (circa GBP50m reduction) or 47% decrease in its
actual income cover being circa GBP5.44m reduction in income. The
Group's also currently has extensive cash reserves (and available
facility) and other uncharged assets (including circa GBP10m of
investment property).
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 the foreseeable future. For these reasons,
they continue to adopt the going concern basis in preparing the
financial statements.
2. Dividends
Amounts recognised as distributions to equity holders in the
period:
2021 2020
GBP'000 GBP'000
Final dividend for the year ended
31 December 2020 of 6p per share
(2019: 6p per share) 1,061 1,061
Interim dividend for the year ended 1,061 -
31 December 2020 of 6p per share
2,122 1,061
========= =========
The Directors recommend a payment of a final dividend for the
year ended 31 December 2021 of 6p per share (2020 - 6p), following
the interim dividend which was paid on 9 February 2022 of 6p per
share (2020 - 6p). The final dividend of 6p per share will be
payable on 20 July 2022 to shareholders on the register at the
close of business on 1 July 2022 (Ex dividend on 30 June 2022).
The full ordinary dividend for the year ended 31 December 2021
is anticipated to be 12p per share, subject to shareholder
approval, being the 6p interim per share paid and the recommended
final dividend of 6p per share.
3. Earnings per ordinary share (basic and diluted)
The calculation of profit per ordinary share is based on the
profit, being a profit of GBP13,511,000 (2020 - GBP2,644,000)
and on 17,683,469 ordinary shares being the weighted average
number of ordinary shares in issue during the year excluding
treasury shares (2020 - 17,683,469). There are no potential
ordinary shares in existence. The Company holds 63,460 (2020
- 63,460) ordinary shares in treasury.
4. Investment properties
Investment
properties
GBP'000
Fair value
At 1 January 2020 169,340
Additions 5,538
Disposals (550)
Fair value adjustment on investment properties held
on leases 501
Revaluation increase 6,146
At 1 January 2021 180,975
Additions 537
Disposals (15,140)
Fair value adjustment on investment properties held
on leases 51
Revaluation increase 961
At 31 December 2021 167,384
==============
Carrying amount
At 31 December 2021 167,384
==============
At 31 December 2020 180,975
==============
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 cash flow risks associated with
a rise in interest rates but does expose it to fair value risk.
2021 2020
Bank loans GBP'000 GBP'000
Interest is charged as to: Rate Rate
Fixed/ Hedged
HSBC Bank plc* 35,000 7.76% 35,000 7.01%
HSBC Bank plc** 25,000 4.71% 25,000 6.58%
Unamortised loan arrangement fees (737) -
Floating element
HSBC Bank plc (3,250) 3,000
Shawbrook Bank Ltd 60 117
-------- -------
56,073 63,117
======== =======
Bank loans totalling GBP60,000,000 (2020 - 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 2021 2020
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% 16.69 (12,833) (26,577)
Interest rate swap 25,000 4.63% - - (1,100)
Interest rate swap 25,000 2.01% 9.92 (2,422) (4,332)
(15,255) (32,009)
============ ============
Net fair value gain/(loss) on derivative financial
assets 16,754 (5,498)
============ ============
* Fixed rate came into effect in September 2008, following a
variation in September 2023 the rate drops to 3.4% for the
remaining term.
** This arrangement came into effect in December 2021. The rates
shown includes a 2.7% margin (2020 - 1.95%). Neither contracts
include break options in the term but are repayable on a cessation
of lending.
6. Bank loans
2021 2020
GBP'000 GBP'000
Bank loans due within one year 560 63,066
(within current liabilities)
Bank loans due after more than one
year 55,513 51
(within non-current liabilities)
Total bank loans 56,073 63,117
======== ========
2021 2021 2021 2020
Analysis of debt maturity GBP'000 GBP'000 GBP'000 GBP'000
Interest* Capital Total Total
Trade and other payables** - 4,889 4,889 5,995
Bank loans repayable
On demand or within one
year 1,759 560 2,319 63,383
In the second year 1,741 500 2,241 52
In the third year to the
fifth year 864 55,013 55,877 -
4,364 60,962 65,326 69,430
========== ======== ======== ========
*based on the year end 3 month SONIA floating rate - 0.45%, and
bank rate of 0.50%.
** Trade creditors, other creditors and accruals
On 16 July 2021 the Group last renewed its loan facility by
entering into a 3 year term loan with HSBC and Santander for
GBP66,000,000.
A Shawbrook bank loan of GBP60,000 at the year-end is repayable
over its life to September 2022.
The bank loans are secured by first fixed charges on the
properties held within the Group and floating asset over all the
assets of the Company. The lenders have also taken fixed security
over the shares held in the Group undertakings.
The estimate of interest payable is based on current interest
rates and as such, is subject to change.
The Directors estimate the fair value of the Group's borrowings,
by discounting their future cash flows at the market rate (in
relation to the prevailing market rate for a debt instrument with
similar terms). The fair value of bank loans is not considered to
be materially different to the book value. Bank loans are financial
liabilities.
7. Events after the reporting date
On 4 January 2022, a further GBP2m was repaid off the revolving
facility leaving GBP11m available to be redrawn for the purchase of
approved properties.
We have agreed a new lease 5 year lease for a 200,000 square
foot industrial building, Bentalls Complex, Maldon, for GBP800,000
pa with effect from 1 March 2022. The previous lease ended in
November 2021 and produced GBP650,000 pa.
8. Copies of the full set of Report and Accounts
Copies of the Company's report and accounts for the year ended
31 December 2020, which will be posted to shareholders shortly,
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
.
Panther Securities PLC +44 (0) 1707 667 300
Andrew Perloff, Chairman
Simon Peters, Finance Director
Allenby Capital Limited (Nominated Adviser) +44 (0) 20 3328 5656
David Worlidge
Alex Brearley
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FR DZGZDVZGGZZM
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