TIDMPNS
RNS Number : 7493X
Panther Securities PLC
27 April 2023
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 2022
CHAIRMAN'S STATEMENT
I am once again pleased to present the results for the year
ended 31 December 2022 which show a profit before tax of
GBP22,902,000 compared to a profit before tax of GBP15,922,000 for
the previous year ended 31 December 2021.
Both these figures are substantially affected by the movement in
our swap liabilities amounting to a gain of GBP19,722,000 in 2022
(2021 - GBP16,754,000). This 2022 movement now turns the liability
we have carried on our balance sheet since 2008, into an asset of
GBP4,467,000. The improvement in the year being due to the market
expectation of future higher interest rates, which are expected to
be in place over the life of the instruments, as at 31 December
2022, compared to those anticipated at 31 December 2021.
If you look at our operating profit, which has the advantage
that it is not distorted by the improvement of interest rate
derivatives, then for 2022 it was GBP6,331,000 compared to
GBP7,701,000 for the previous year. The main reason for the
decrease is that we had significantly higher costs in 2022, leading
to our cost of sales being GBP1,098,000 higher. We had
significantly increased rates, repairs, legal costs and of course
light and heat. The increase included certain one-off costs that
will not be repeated next year, such as back dated rates and also
the repairs and legal fees to facilitate significant lettings of
Maldon and Trowbridge. We estimate over half of the additional cost
of sales in 2022 will be non-recurring.
Our bad debt charge was back to a normal level of GBP702,000 in
2022 compared to a much reduced GBP286,000 in 2021, as with
hindsight we overprovided in 2020 at the peak of the pandemic and
we got the benefit of the reversal of this overprovision in
2021.
Rents Receivable
Rents receivable for the year ended 31 December 2022 were
GBP13,411,000, compared to the previous year's GBP13,172,000. This
was despite not benefiting from rents of circa GBP440,000 received
in 2021 following the disposals of Wembley and West Molesey in late
2021. In 2023 we should see further increases as we get a full year
of rent on our purchases (the key ones being Chorley and
Trowbridge) and also a full year at the improved rent on
Maldon.
Disposals
The Quadrangle, Glasgow
On 2 November 2021, we 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 was GBP1,250,000, subject to planning. We received
GBP65,000 released to us last year (and the non-refundable deposit
taken to profit in 2021), with the balance at completion on 1
August 2022 being that recognised in the 2022 figures.
Acquisitions
In May 2022, we acquired the Lower Healey Business Park in
Chorley, Lancashire. The freehold estate comprises approximately 10
acres containing 116,000 sq. ft. of single storey factory space let
to a number of different tenants with some vacant land capable of
further development. We understand there is good tenant demand in
this area partly because the Estate adjoins the M61 and is 2.5
miles from Exit 8. This Estate is currently producing GBP432,000
per annum and cost GBP5,026,000, including purchasing costs.
In June 2022, we completed our purchase of the (previously
mentioned) substantial freehold factory and warehouse in
Trowbridge, Wiltshire. This comprised of approximately 96,000
sq.ft. of usable space standing in six acres. This property is
located on an excellent industrial estate in Trowbridge where
demand is strong. This unit was purchased vacant for GBP3,300,000
and has since been let in August to an excellent covenant at
GBP455,000 per annum exclusive and has shown a decent value
increase at our year end.
Developments
Swindon
We are almost there and just need to agree a price for extending
and varying our lease with 70 years remaining. It is slow progress
but we hope to finally get there in 2023!!! We have one planning
permission granted with a second one in progress but tied in with
the lease extension on this central Swindon site.
Barry Parade, Peckham Rye
Our original attractive scheme for this site was eventually
rejected at appeal. Whilst this application was at appeal we
submitted a similar proposal with reduced residential units but
higher commercial elements. This is still going through planning,
for which we hope to obtain a positive decision for in due course.
Currently, we are negotiating the S.106 agreement which will
include an extortionate commuted sum in lieu of us providing
affordable units (four units on a nine unit scheme). Due to the
number of units and the layout of the scheme, we are already aware
that no affordable housing providers would be interested, which is
forcing us to pay the commuted sum.
Peterborough
The former Beales store in Peterborough, was vacated by New
Start 2020 Limited, trading as Beales, in February 2023. The store
was uneconomical for them due to business rates applied to the
trading area. Our planning application for the mixed-use
development of shops/offices and 124 residential units is at the
final stages and we hope to have a planning committee date in May
following the local elections. The current older style department
store contains approximately 145,000 sq. ft. of space which is
unsuitable for current retail markets.
Post Balance Sheet Events
On 16 January 2023, the Company drew down GBP2,000,000 from its
revolving facility.
On 23 March 2023 the Company completed on the purchase of the
freehold of 192-194 Northdown Road, Cliftonville, Margate for
GBP451,000. The majority of the property is let to Boots at
GBP25,000 pa with the remaining vacant space potentially suitable
for conversion to residential. This purchase adjoins a property in
our existing ownership.
Loans
On 16 July 2021 we 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.
GBP59,750,000 was drawn at the year end and we drew another
GBP2,000,000 after the year end. We make repayments of GBP125,000
per quarter.
We will be starting refinancing discussions soon which we hope
to put in place by the end of 2023.
From 1 September 2023, following the variation made in 2021, we
will start to benefit from the drop in our fixed rate to 3.40% pa
(currently 5.06% pa) on GBP35,000,000 of our loan saving the Group
GBP581,000 p.a. in cash flow until the end-point of the instrument
(compared to pre-variation). This instrument is in place until 31
August 2038.
Our other instrument fixes our interest rate at 2.01% pa on
GBP25,000,000 until 1 December 2031.
With GBP60,000,000 of our GBP66,000,000 facility fixed at lower
than market rates for many years to come we are in an enviable
position.
Charitable Donations
In March 2022 the Group donated GBP20,000 to the Daily Mail
Ukrainian appeal. We also made regular other donations in the year
including GBP10,000 to Land Aid and other smaller contributions
being mainly adverts within Charity programs or diaries.
Political Donations
I consider most of the problems our business and many other
businesses have to deal with occur because of poorly considered
legislation and excessive taxation brought in by our
unknowledgeable political leaders.
Therefore, at this year's annual general meeting, I have
proposed a resolution for the Company to donate GBP20,000 to the
Reform Party, with a hope many other people will believe a change
of political direction may be of benefit to all businesses, and
thus also the general population.
I have previously proposed resolutions to donate firstly to the
Conservative party then latterly to UKIP which has substantially
transformed itself into the Reform party, after UKIP succeeded in
convincing the majority of those who bothered to vote that leaving
the European Union was the correct decision for this country. The
Reform Party has some very interesting proposals but, most
importantly, they state that they will listen to the concerns of
the majority of the public and try to reduce taxation, and
excessive regulations.
As with previously proposed political donations, I will not vote
my personal shareholdings, but leave it to the body of shareholders
to decide if we should give support to this new party even if it is
just to show that our present, so called, Conservative party's
failure to enumerate traditional Conservative policies is unwelcome
by many voters.
Dividends
We paid a delayed 6p per share interim dividend for year ended
31 December 2021 in February 2022. We also paid a 6p per share
final dividend for the year ended 31 December 2021 on 20 July 2022.
We paid an interim dividend for the year ending 31 December 2022 of
6p per share paid on 20 October 2022.
A 10p per share special dividend in relation to the year ending
31 December 2023 was paid on 10 February 2023 to recognise the
improvement in our balance sheet due to the reversing of our swap
liabilities to a reasonable asset.
The Directors recommend a payment of a final dividend for the
year ended 31 December 2022 of 6p per share, following the interim
dividend which was paid on 20 October 2022 of 6p per share. The
final dividend of 6p per share will be payable on 19 July 2023 to
shareholders on the register at the close of business on 30 June
2023 (Ex dividend on 29 June 2023).
We expect to maintain our final and interim dividends for the
2023 full year and intend to make further announcements in relation
to this in due course and of course have already paid the 10p per
share special dividend.
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 are in order for 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
27 April 2023
CHAIRMAN'S RAMBLINGS
Max Bygraves was a very popular much loved all round entertainer
who occasionally performed in pantomimes during the 1950s.
My older brother and I were very lucky to have been taken by our
parents to see him in "Mother Goose" at the London Palladium in
1954. As a 10 year old, these were exciting outings for me. We sat
at the very rear of the ground floor stalls where I could sit on
the up folded seat to see the stage over the people in front of
us.
I am sure you all know the story about a goose that used to lay
a golden egg each day that brought wealth to a poor village, but
their leaders became greedy and decided to cut open its stomach to
find all the other golden eggs inside. Well, of course, there were
no golden eggs and the goose died, thus no more golden eggs were
laid, and the village became poor again. Part way through the show
the villagers were looking round and about to see where "Goosey"
had laid the golden egg. This involved some actors running around
the theatre and one finding a member of the audience to whom they
would give a golden egg for them to take on stage and announce,
"I've found it". Obviously, as I was the cutest little boy in the
audience, they picked me! The egg was in a brown paper bag but I
was too shy and nervous to take the egg up on stage so my brother,
Harold, took it up and got the applause for finding it and was also
given an inflatable goose.
This is where the expression "don't kill the goose that lays the
golden egg" came into being.
It also made me think what geese this country have which lay the
golden eggs? Well, first was energy. The UK sits on 100 years of
available coal and huge offshore oil and gas reserves and recently
discovered gas under many remote areas of the country. This
offshore oil has for some years produced golden eggs, very heavily
taxed, but we have currently killed off the possible golden eggs of
fracking (which has made the USA completely energy independent).
Even though renewable energy is clearly an important energy source,
and governments should encourage renewables, but why kill off our
energy independence? How foolish can we be?
One of Max Bygraves' catch phrases, "I'm gonna tell you a
story", also reminded me that sometimes a story helps people
understand.
My Friend the Builder
One of my friends, a builder who has carried out a number of
building jobs for me very successfully over the past 35 years, the
last one being a joint development of nine award winning housing
units in the West Country near his home. This was a few years ago
and after the scheme he decided he was fed up with planning
housing/building schemes because the authorities made it as
difficult as possible.
With his share of nine house scheme profits, he purchased a
small but successful laminate furniture manufacturer also in the
West Country and all was going well with the business running
smoothly. Well aware of local/UK and world news from the media he
heard about Russian troops carrying out "manoeuvres" near the
Ukraine border, and was concerned because over 50% of his laminate
trade involved using wood/veneers from Ukraine and he knew that if
Russia attacked Ukraine there would be disruption to his
supply.
With uncanny foresight he immediately ordered and contracted for
nine months' supply of his speciality timber from his supplier (who
were delighted with the order) for quick delivery, although this
put his finances at a stretch. Well, his intuition was correct, and
we all know what happened. Supplies of raw materials shrunk
considerably, but he managed to continue his usual production all
year and even though his production never ceased, prices for this
raw material rose 50%. This allowed his customers to continue to
receive his products, cheaper than his rivals (many of whose
supplies had been rationed) for six or seven months before some
alternative supplies became available at much higher prices.
Most of you will not be too worried about a shortage of wood
veneer, but the same circumstances apply to energy, oil, and
gas.
I suspect we have quite a few thousand people in the Ministry of
Defence, watching events, and the Department of Energy scrutinising
world supplies, all paid excessively well to ponder what problems
in this big world could affect this small country badly.
Why didn't any of our bureaucrats say to our Ministers "pick up
the phone to the chief executives of our fracking, oil and gas
companies to ramp up production quickly as trouble is coming and
where necessary we will grant assistance to assist in any way we
can"? A request that coal fired power generators also be kept on
standby. If they had, it may have saved this country's inhabitants
billions of pounds of direct energy costs and also the taxpayer
millions of pounds in subsidies. Indeed, if Russia saw that the UK
and Europe were able to ramp up their own energy production to move
dependence away from Russian energy, they may have reconsidered
their aggressive invasion plans.
I then wondered, what other geese does this country have which
lay the golden eggs?
Retail High Streets
A second goose for supplying golden eggs was our retail property
industry. People love shopping and our high streets were the
magnets of world travellers who spent their cash in our country.
The anchor of most of our high streets was the department stores,
many of which started over 150 years ago. They contained a
cornucopia of goods available at competitive prices.
Our clodhopper government taxed them so excessively as to
decimate the department store sector, which in turn damaged the
other high street retailers who always benefitted from the
attractions of these huge stores in town centres. Thus many towns
and, especially Northern towns, became in need of massive
regeneration funds to "level up" the damage created by poor
taxation decisions. There are so many benefits to our country in
having successful and busy high streets but too many social
benefits to mention here. Oxford Street and Bond Street in Central
London were, for many years as long as I can remember, the focal
point of wealthy tourists anxious to purchase luxury goods. By
removing the incentive of their ability to reclaim the VAT they pay
on their purchases, many of them now travel to Paris, Milan and
Venice as they feel they receive better value. This affects the
hotel/restaurant and service industries. The bureaucrats have
killed another golden egg producer.
The General Property Industry
The backbone of the country's wealth is its housing market,
which was sophisticated and worked well, with saver's money
deposited in building societies and banks who recycled loans to
help new buyers and thus allowed many builders to increase
production and provided new and extra homes. Of course, local
councils saw the opportunity of squeezing money out of builders and
demanded various payments, under a variety of pretexts, to obtain
permissions. Councils were incredibly slow in decision-making and
because less homes were built, so prices increased, stamp duty was
raised so often and it is mind boggling levels to which the taxes
have reached for higher value properties, thus hindering the
liquidity of the housing market.
The parasites of Westminster have taxed and re-taxed those who
save and invest in housing for rental, such that there is now a
growing shortage of rental homes. If the excessive taxation payable
by rentiers was not quite enough, legislation under the zero carbon
mantra has been brought in to load rental properties with heavy
extra insulation costs. The simple answer is for the owner to sell
making less availability and higher costs of rentals which our
foolhardy government will have to subsidise as a major part of the
poorer renters cannot afford the higher cost. Thus, not only
another golden egg disappears but a lead balloon attached to our
social security costs.
"I'm gonna tell you another story".
Bureaucratic Sloth
When I was first an Estate Agent, I had to employ a qualified
Surveyor to assist with some of our transactions. I chose one who
was particularly helpful to us. He told me my late Father had given
him some jobs when he first started his own practice so he in turn
was very loyal and reasonable to our fledgling practice.
I never forgot the story he relayed to me many years ago. He
left university/college with a surveying degree and went to work
for a London council in their surveying department. In those days,
councils were able to grant loans to enable people to buy their own
homes.
He was given a list of properties to inspect to ascertain that
the properties were good for the loan and appropriate value.
He carefully studied his property list and worked out the best
logistical way to view them. The first day he inspected over ten
properties as he said it was not an onerous task. He also arrived
back at the council offices in good time to start completing the
report forms. He was expecting some type of praise for such speedy
and diligent work.
However, the Head Surveyor told him that he had worked too hard.
He was meant to carry out one survey in the morning and one in the
afternoon, otherwise half the department would be out of a job
within months.
He did not stay long with this council as he felt they were
wasting not only their time but his time as well, so he decided to
start his own firm and long was it successful.
Personally in recent times, having dealt with the Probate
Office, HM Revenue & Customs, The Land Registry and the
District Valuers Department, it appears this attitude is still well
established. Long-term illness in the civil service is twice that
of the private sector. Even the simplest of matters takes an
inordinate amount of time.
Whilst excessive taxation is more obvious because of its extent,
foolhardy interfering legislation is also adversely perverse in its
ramifications.
Antique Trade Interference
The ban on ivory trading to save the elephants of Africa and
India, and big game, is a case in point. Banning the sale of
antique ivory carvings or ivory worked and used maybe between
150-50 years ago will not save one elephant's life but will destroy
many thousands of peoples businesses. If the authorities donated a
tiny fraction of our overseas aid to the appropriate countries,
many more elephants would be protected. However, in their usual
gesture politics way, our legislators are bringing in legislation
to stop legal licensed hunters from anywhere bringing back their
trophies. Whilst I am very much against hunting, the conservation
authorities in the relevant jurisdiction pointed out their policies
which include limited and carefully licensed hunting has increased
the elephant population which seems to be an oxymoron but reflects
real life situations and actions of the citizens of the countries
concerned whereas those that banned hunting saw substantial falls
in the elephant population, until they reversed the bans. Virtually
all African nations who were very intent on protecting their
environment and animal diversity wrote to our legislators
explaining why they oppose the ban.
Whilst this type of interference in other nations' policies may
be good gesture politics, it is extremely condescending to African
nationals who have vast experience of what saves elephants and what
does not. (Read Dominic Lawson's article in the Sunday Times of
12th March 2023.)
I include this rant about hunting, not because I believe in
hunting, but it is symptomatic of our legislators producing
interfering and poor legislation because a small bunch of
entertainers have found a protestable subject that will get them
publicity as caring people, even though they are misconceived, but
by their protests create the exact opposite of what they wish to
achieve.
This is promoted by Michael Gove who is also involved with laws
on property including environmental laws, which will create a
massive reduction in rental availability of homes. The one
certainty is his proposals will destroy the rental market and
create large extra costs to be paid out of the social security
budget.
The freedom to enjoy one's extra money from extra work and
success is discouraged should you want a second home for leisure
and/or should you provide a rental property, to supplement your
pensions, extra tax on buying and also on your income - the result
- less rental homes - less golden eggs.
Work hard, build a big business and when you sell it, having
already paid 50% of your income for many years in tax, then paid
20% capital gains tax on a sale and as and when you die (hopefully
many years later) 40% inheritance tax. I call this grand
larceny.
You are better off moving to a non-tax paying area for your
final years, which of course many people do.
One percent of our wealthiest taxpayers pay about 30% of the tax
gathered. What would happen if half of them left our country, i.e.,
150,000 people? Who would pay that 15% tax that disappeared? Would
there be any golden eggs left!!!
Yours
Andrew S Perloff
Chairman
27 April 2023
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
2022 2021 2020 2019
Gross profit margin (gross profit/ turnover) 57% 65% 73% 76%
Loan to value* 39% 36% 38% 36%
Interest cover (actual) * 297% 281% 259% 353%
Finance cost rate (finance costs excluding lease portion/ average borrowings
for the year) 7.0% 7.5% 7.0% 7.1%
Yield (rents investment properties/ average market value investment
properties) 8.2% 7.9% 7.8% 8.8%
Net assets value per share 637p 553p 488p 480p
Earnings/ (loss) per share - continuing 96.6p 76.4p 14.9p (23.1)p
Dividend per share** 12.0p 12.0p 12.0p 12.0p
Investment property acquisitions GBP8.9m GBP0.8m GBP5.5m GBP8.1m
Investment property disposal proceeds GBP1.2m GBP15.8m GBP0.7m GBP1.1m
* As reported to the Lenders - based on charged property rents,
borrowed funds and bank valuations as appropriate.
** Based on those declared for the year.
Business review
The overall year was a strong year for the Group with earnings
being almost a GBP1 per share. Much of this growth was driven by
the turnaround in the valuations of the financial derivatives which
improved by GBP19.7 million (2021- GBP16.8 million). Following some
variations including the premium paid in 2021 to amend the
agreement, and also due to a higher interest rate outlook, these
are now forecasted to be strong hedges going forward - adding value
to the Group and putting it in an enviable position in terms of its
fixing of its borrowing costs.
Group's turnover grew in 2022 by GBP239,000, despite the
disposals late in 2021 (of Wembley and West Molesey), pre-disposal
rents of GBP438,000 were received in 2021, which we did not benefit
from in 2022. The property investments purchased in 2022 of Chorley
and Trowbridge were only bought half way through the year, together
with Maldon (our largest rent on a single property) only being
re-let for three quarters of the year (at the higher rent of
GBP800,000), means we should benefit from circa a further
GBP500,000 additional rents in 2023 (compared to 2022).
Disappointingly the overall gross profits were held back by higher
costs, many of these items are non-recurring charges, which should
not be repeated, but the Group cannot avoid the rising costs that
are currently affecting most organisations and individuals.
The bad debt charge was higher in 2022, compared to 2021, but
actually this is back to more normal levels. 2021 showed a low
charge, as the directors with hindsight had been too cautious in
2020, with the COVID-19 pandemic still causing uncertainty, and
this overprovision was unwound in 2021.
The property values improved slightly by GBP1.4 million
following a Directors' valuation at the year-end.
The most significant impact on the income statement, already
mentioned, was the sizeable improvement of the swap liability
(derivative financial liabilities) by GBP19.7 million in 2022, in
addition to the GBP16.8 million improvement in 2021. Approximately
half of the reduction in the liability in 2021 was due to the Group
paying a premium to exit the swap and re-enter a new more
beneficial arrangement for a GBP5 million premium at an estimated
discount of GBP3.3 million (this is explained in more detail under
Financing below). The remainder of the improvement in our swap
liability position in 2021 and 2022 is in relation to the change in
market expectations of higher future interest rates (leading to a
lower liability).
The consolidated statement of cash flows in 2022, shows that
cash was depleted by GBP8.9 million in the year, but we also bought
exactly GBP8.9 million of investment properties.
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 637p (2021 - 553p per share). This improvement was less
than the GBP1 per share mentioned regarding earnings, due to the
18p of dividends paid in the year. The 18p included the payment of
a delayed 2021 interim dividend of 6p per share as well as the
usual 12p. The board delayed this dividend whilst assessing the
impact of COVID-19 and waiting for the loan renewal to be approved
by credit committee.
Through the many downward economic cycles and in particular, the
COVID-19 pandemic, the most important plank within the Group's
business plan is the balance within the portfolio between different
asset classes and the resulting diverse, resilient, income streams
these investments provide. Over the last few years, the industrial
properties and the secondary "local" retail investments have
performed the best in terms of growth in values and have shown
resilient income collection. We also benefit from having properties
with residential elements or planning potential. As explained in
the last few annual reports (and worth repeating), we have seen
that the secondary local shopping parades hold up well, especially
during the pandemic. The traders in these properties managed to
survive and some even flourish. Although lockdowns meant closures,
many of these businesses 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 in particular 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, that secondary retail properties (which is
a large part of our portfolio - over half by value) will be less
affected by the seismic change in 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 ever changing consumer
habits. In many instances, the Web even provides additional
opportunities i.e. being able to offer 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 are experiencing rental growth, some of this being from
renting long-term vacant properties and the rest from improved
rental terms. Going forward over the next couple of years we
foresee the biggest issue being controlling the holding and
maintenance costs of our properties. In response to this, we are
bringing in further controls and phasing our work programmes.
Additionally there will be potential additional costs of
improving the energy efficiency of our buildings to keep them in
line, or even ahead of the EPC ("energy performance certificate")
regime requirements which is constantly being updated. We are
attempting to cost this for our more valuable properties to
potentially include in our refinancing request (if required).
We believe there are still many opportunities to unlock value
within our portfolio, both in terms of letting more of the vacant
properties, through repurposing and some from planning schemes to
rebuild.
The economy has entered a higher interest and high inflation
environment. We have fixed interest swaps which will protect us
from interest increases. The nature of property companies naturally
protects the business from inflation, as property investments tend
to increase in line with inflation, whilst the real value of loans
utilised effectively decreases.
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.
The Board is confident about the business going forward.
Financing
The Group refinanced its facilities in the prior year and agreed
a GBP66 million facility for a three-year term from July 2021. We
are hoping to refinance again by the end of 2023.
At the Statement of Financial Position date, the Group had
GBP4.5 million of cash funds, with GBP5.5 million 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
GBP19.722 million (2021: GBP16.754 million). Following this gain
the total derivative financial is now an asset on our Consolidated
Statement of Financial Position of GBP4.5 million (2021: GBP15.3
million liability).
In November 2021 a GBP25m swap which was at a fixed interest
rate of 4.63% came to the end of its term 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 27) 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 the fair value of these interest rate
swaps; this is partly due to their long dated nature.
Financial risk management
The Company and Group's operations expose it to a variety of
financial risks, the main two being the effects of changes in the
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 but have improved in 2022. 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 (the 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 considered 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) where 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 streams and their 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 stronger
performing 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 that 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 permission 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 adverse
market or property risks then these will ultimately affect our
financing, making our lenders either force the Group to sell assets
at non-optimal times, or take possession of the Group's assets. The
management, business model and diversification factors described
above 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
remedy 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.
Where possible cover with
Acts of God (e.g. Weather incidents, insurance. Ensure the Group
COVID 19) fire, terrorism, pandemics 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 where
possible to diversify its income streams. Caerphilly and Gateshead
were relatively more recent purchases which 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 installed a purchase order system in 2018 and in 2019 replaced
this with a new system, which has since been refined 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 their very nature often have a
significant impact on local communities, providing services and
convenience businesses, or places for local enterprise or
employment. By 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 in planning
permission which can enhance local areas. The Group also ensures it
recycles much of its head office paper and is moving towards less
paper communication; from 2019 to date our invoices have been
emailed as standard to our tenants and we also encourage the
receipt of electronic invoices. In 2021 we had a renewed push to
move 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 and on the Company's website. 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 financial news can keep up to date with
relevant information. Our Chairman is unpaid, his benefit or income
from the Company is received via dividends 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 27 April 2023
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2022
Notes 31 December 31 December
2022 2021
GBP'000 GBP'000
Revenue 13,411 13,172
Cost of sales (5,749) (4,651)
Gross profit 7,662 8,521
Other income 1,009 958
Administrative expenses (1,638) (1,492)
Bad debt expense (702) (286)
---------------- ----------------
Operating profit 6,331 7,701
Profit on disposal of investment properties 461 701
Movement in fair value of investment
properties 4 1,384 961
---------------- ----------------
8,176 9,363
Finance costs - interest (3,265) (2,322)
Finance costs - swap interest (1,481) (2,806)
Finance costs - swap variation - (5,000)
Investment income 28 29
Loss on the disposal of investments (278) (96)
Fair value gain on derivative financial
liabilities 5 19,722 16,754
---------------- ----------------
Profit before income tax 22,902 15,922
Income tax expense (5,917) (2,411)
Profit for the year 16,985 13,511
================ ================
Continuing operations attributable
to:
Equity holders of the parent 16,985 13,511
Profit for the year 16,985 13,511
================ ================
Earnings per share
Basic and diluted - continuing operations 3 96.6p 76.4p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
Notes 31 December 31 December
2022 2021
GBP'000 GBP'000
Profit for the year 16,985 13,511
----------- -----------
Items that will not be reclassified
subsequently to profit or loss
Movement in fair value of investments
taken to equity (59) 55
Deferred tax relating to movement in
fair value of
investments taken to equity 15 (14)
Realised fair value on disposal of investments
previously taken to equity 309 148
Realised deferred tax relating to disposal
of investments previously taken to equity (77) (37)
Other comprehensive income for the year,
net of tax 188 152
Total comprehensive income for the
year 17,173 13,663
=========== ===========
Attributable to:
Equity holders of the parent 17,173 13,663
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Company number 00293147
As at 31 December 2022
Notes 31 December 31 December
2022 2021
ASSETS GBP'000 GBP'000
Non-current assets
Plant and equipment 64 -
Investment properties 4 176,937 167,384
Derivative financial asset 4,467 -
Deferred tax asset - 2,252
Right of use asset 258 298
Investments 256 292
181,982 170,226
----------- -----------
Current assets
Asset held for sale 191 -
Stock properties 350 350
Investments 29 29
Trade and other receivables 3,178 2,996
Cash and cash equivalents (restricted) 4 5,009
Cash and cash equivalents 4,454 8,343
8,206 16,727
----------- -----------
Total assets 190,188 186,953
=========== ===========
EQUITY AND LIABILITIES
Capital and reserves
Share capital 4,437 4,437
Share premium account 5,491 5,491
Treasury shares (772) (213)
Capital redemption reserve 604 604
Retained earnings 101,467 87,464
Total equity 111,227 97,783
Non-current liabilities
Borrowings 6 58,807 55,513
Derivative financial liability 5 - 15,255
Deferred tax liabilities 3,371 -
Leases 8,249 8,353
----------- -----------
70,427 79,121
----------- -----------
Current liabilities
Trade and other payables 7,869 9,018
Borrowings 6 500 560
Current tax payable 165 471
----------- -----------
8,534 10,049
----------- -----------
Total liabilities 78,961 89,170
----------- -----------
Total equity and liabilities 190,188 186,953
=========== ===========
The accounts were approved by the Board of Directors and
authorised for issue on 27 April 2023. They were signed on its
behalf by:
A.S. Perloff, Chairman
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
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 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 1
January 2022 4,437 5,491 (213) 604 87,464 97,783
Total comprehensive
income - - - - 17,173 17,173
Dividends - - - - (3,170) (3,170)
Treasury share
purchase - - (559) - - (559)
-------- -------- --------- ----------- ---------- ----------
Balance at 31
December 2022 4,437 5,491 (772) 604 101,467 111,227
======== ======== ========= =========== ========== ==========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
31 December 31 December
2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Operating profit 6,331 7,701
Add: Depreciation 45 -
Rent paid treated as interest (687) (687)
Profit before working capital change 5,689 7,014
(Increase)/ decrease in receivables (182) 929
Decrease in payables (1,149) (48)
----------- -----------
Cash generated from operations 4,358 7,895
Interest paid (3,766) (4,295)
Income tax paid (662) (620)
----------- -----------
Net cash (used in)/ generated from
operating activities (70) 2,980
----------- -----------
Cash flows from investing activities
Purchase of investment properties (8,947) (832)
Purchase of investments** (66) (6)
Purchase of plant and equipment (300) -
Proceeds from sale of investment property 1,176 15,841
Proceeds from sale of investments** 74 435
Dividend income received 21 21
Interest income received 7 8
----------- -----------
Net cash (used in)/ generated from
investing activities (8,035) 15,467
----------- -----------
Cash flows from financing activities
Draw down of loan 8,500 6,000
Repayments of loans (5,060) (12,057)
Loan amortisation repayments (500) (250)
Purchase of own shares (559) -
Swap variation - (5,000)
Loan arrangement fees and associated
set up costs - (884)
Dividends paid (3,170) (2,122)
----------- -----------
Net cash used in from financing activities (789) (14,313)
----------- -----------
Net (decrease)/ increase in cash and
cash equivalents (8,894) 4,134
Cash and cash equivalents at the beginning
of year* 13,352 9,218
----------- -----------
Cash and cash equivalents at the end
of year* 4,458 13,352
=========== ===========
* Of this balance GBP4,000 (2021: GBP5,009,000) 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2022
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 2022 or 2021. The financial information for the year ended
31 December 2021 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 2022 is
derived from the audited statutory accounts for the year ended 31
December 2022 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 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 December 2024.
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. It is considered that the facility will be renewed prior
to its expiry in July 2024 since 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 seeks to
maintain excellent relations with its lenders. The loan is made
jointly by two lenders and also as mentioned has a low level of
gearing which both gives the Group's finance situation more
resilience.
The lenders covenants as at 31 December 2022 have been reviewed
and significant movements would be required before a covenant was
breached such as a 30% decrease in the secured portfolio valuation
(a circa GBP46m reduction) or a 49% decrease in its actual income
cover being a circa GBP5.7m reduction in income. The Group also
currently has 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:
2022 2021
GBP'000 GBP'000
Interim dividend for the year ended
31 December 2021 of 6p per share
(2020: 6p per share) 1,062 1,061
Final dividend for the year ended
31 December 2021 of 6p per share
(2020: 6p per share) 1,054 1,061
Interim dividend for the year ended
31 December 2022 of 6p per share 1,054 -
3,170 2,122
========= =========
The Directors recommend a payment of a final dividend for the
year ended 31 December 2022 of 6p per share, following the interim
dividend which was paid on 20 October 2022 of 6p per share. The
final dividend of 6p per share will be payable on 19 July 2023 to
shareholders on the register at the close of business on 30 June
2023 (Ex dividend on 29 June 2023).
The full ordinary dividend for the year ended 31 December 2022
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.
A 10p per share special dividend in relation to the year ended
31 December 2023 was paid on 10 February 2023.
3. Earnings per ordinary share (basic and diluted)
The calculation of profit per ordinary share is based on the
profit, being a profit of GBP16,985,000 (2021 - GBP13,511,000)
and on 17,577,699 ordinary shares being the weighted average
number of ordinary shares in issue during the year excluding
treasury shares (2021 - 17,683,469). There are no potential
ordinary shares in existence. The Company holds 275,000 (2021
- 63,460) ordinary shares in treasury.
4. Investment properties
Investment
properties
GBP'000
Fair value
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 1 January 2022 167,384
Additions 8,947
Disposals (715)
Fair value adjustment on investment properties held
on leases (63)
Revaluation increase 1,384
At 31 December 2022 176,937
==============
Carrying amount
At 31 December 2022 176,937
==============
At 31 December 2021 167,384
==============
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.
2022 2021
Bank loans GBP'000 GBP'000
Interest is charged as to: Rate Rate
Fixed/ Hedged
HSBC Bank plc* 35,000 7.76% 35,000 7.76%
HSBC Bank plc** 25,000 4.71% 25,000 4.71%
Unamortised loan arrangement fees (443) (737)
Floating element
HSBC Bank plc (250) (3,250)
Shawbrook Bank Ltd - 60
------- --------
59,307 56,073
======= ========
Bank loans totalling GBP60,000,000 (2021 - 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 2022 2021
amount rate of contract Fair value Fair value
remaining
GBP'000 'years' GBP'000 GBP'000
Derivative Financial
Asset/ (Liability)
Interest rate swap* 35,000 5.06% 15.69 1,236 (12,833)
Interest rate swap** 25,000 2.01% 8.92 3,231 (2,422)
4,467 (15,255)
============ ============
Net fair value gain on derivative financial
assets 19,722 16,754
============ ============
* Fixed rate came into effect in September 2008, following a
variation made in 2021, in September 2023 the rate drops to 3.4%
for the remaining term. ** This arrangement commenced in December
2021 but was entered into as a future fixing in April 2018.
The rates shown includes a 2.7% margin (2021 - 2.7%). Neither
contracts include break options in the term but are repayable on a
cessation of lending.
6. Bank loans
2022 2021
GBP'000 GBP'000
Bank loans due within one year 500 560
(within current liabilities)
Bank loans due after more than one
year 58,807 55,513
(within non-current liabilities)
Total bank loans 59,307 56,073
======== ========
2022 2022 2022 2021
Analysis of debt maturity GBP'000 GBP'000 GBP'000 GBP'000
Interest* Capital Total Total
Bank loans repayable
On demand or within one
year 3,626 500 4,126 2,319
In the second year 2,097 58,807 60,904 2,241
In the third year to the
fifth year - - - 55,877
5,723 59,307 65,030 60,437
========== ======== ======== ========
*based on the 3 month SONIA floating rate charged in March 23 -
3.44%.
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 31 December 2021 was
repaid in 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 16 January 2023 the Company drew down GBP2,000,000 from its
revolving facility.
On 23 March 2023 the Company completed on the purchase of the
freehold of 192-194 Northdown Road, Cliftonville, Margate for
GBP451,000. The majority of the property is let to Boots at
GBP25,000 pa with the remaining vacant space potentially suitable
for conversion to residential. This purchase adjoins a property in
our existing ownership.
8. Copies of the full set of Report and Accounts
Copies of the Company's report and accounts for the year ended
31 December 2022, 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
.
+44 (0) 1707 667
Panther Securities PLC 300
Andrew Perloff, Chairman
Simon Peters, CEO & Finance Director
Allenby Capital Limited +44 (0) 20 3328 5656
(Nominated Adviser and Joint Broker)
Alex Brearley
Piers Shimwell
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END
FR ZZGZDFNRGFZM
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April 27, 2023 09:34 ET (13:34 GMT)
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