Panther Securities - Final Results (Correction) - Part 2
29/04/2015 12:17
- Part 2: For the preceding part double click ID:nRSc7024La
68,760
Derivative financial liability 4 24,475 14,662
Obligations under finance leases 7,038 7,021
102,571 90,443
Current liabilities
Trade and other payables 11,681 9,326
Short-term borrowings 1,140 3,170
Liabilities held for sale 228 -
Current tax payable 111 242
13,160 12,738
Total liabilities 115,731 103,181
Total equity and liabilities 187,285 171,097
The accounts were approved by the Board of Directors and authorised for issue
on 28 April 2015. They were signed on its behalf by:
A.S. Perloff
Chairman
* Of this balance £247,000 (2013: £444,000) is restricted by the Group's
lenders i.e. it can only be used for purchase of investment property
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2014
Share Share Capital Retained Total
capital premium redemption earnings
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2013 4,217 2,886 604 54,285 61,992
Total comprehensive income - - - 6,974 6,974
Dividends 80 864 - (2,034) (1,090)
Balance at 1 January 2014 4,297 3,750 604 59,225 67,876
Total comprehensive income - - - 4,650 4,650
Dividends 75 942 - (2,071) (1,054)
Balance at 31 December 2014 4,372 4,692 604 61,804 71,472
Within retained earnings are unrealised gains of £nil and deferred tax credit
of £512,000 (2013 - unrealised gains of £nil and a deferred tax credit of
£521,000) relating to fair value of available for sale investments (shares).
CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 31 December 2014
31 December 2014 31 December 2013
£'000 £'000
Cash flows from operating activities
Profit from operating activities 6,201 7,003
Add: Depreciation charges for the year 95 106
Add: Write off of goodwill - 8
Add: Loss on impairment of stock properties 259 259
Less: Rent paid treated as interest (544) (544)
Profit before working capital change 6,011 6,832
Increase / (decrease) in receivables 439 (924)
Increase in payables 2,626 1,168
Cash generated from operations 9,076 7,076
Interest paid (4,457) (4,417)
Income tax paid (188) (121)
Net cash generated from continuing operating activities 4,431 2,538
Net cash generated from discontinuing operating activities 163 153
Cash generated used in investing activities
Purchase of plant and equipment (82) -
Purchase of investment properties (3,171) (5,326)
Purchase of available for sale investments (shares) (63) -
Proceeds from sale of investment property 1,193 2,175
Proceeds from sale of fixed assets 29 -
Dividend income received 11 15
Interest income received 10 9
Net cash used in continuing investing activities (2,073) (3,127)
Net cash used in discontinuing investing activities (7) (112)
Cash generated from financing activities
Repayments of loans (1,149) (147)
Draw down of loan 1,197 2,800
Dividends paid (1,054) (1,090)
Net cash generated from continuing financing activities (1,006) 1,563
Net cash generated from discontinuing financing activities (31) 30
Net increase in cash and cash equivalents 1,477 1,045
Cash and cash equivalents at the beginning of year 3,858 2,813
Cash and cash equivalents at the end of year* 5,335 3,858
(1,090)
Net cash generated from continuing financing activities
(1,006)
1,563
Net cash generated from discontinuing financing activities
(31)
30
Net increase in cash and cash equivalents
1,477
1,045
Cash and cash equivalents at the beginning of year
3,858
2,813
Cash and cash equivalents at the end of year*
5,335
3,858
* Of this balance £247,000 (2013: £444,000) is restricted by the Group's
lenders i.e. it can only be used for purchase of investment property
General Information
While the financial information included in this preliminary announcement has
been prepared in accordance with International Financial Reporting Standards
(IFRSs), this announcement does not itself contain sufficient information to
comply with IFRSs. The Group has also published full financial statements that
comply with IFRSs available on its website and to be circulated shortly.
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 December 2014 or 2013.
The financial information for the year ended 31 December 2013 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 auditors
reported on those accounts, their report was unqualified 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 2014 is derived from
the audited statutory accounts for the year ended 31 December 2014 on which
the auditors have given an unqualified report, that did not contain a
statement under section 498(2) or 498(3) of the Companies Act 2006 and did not
include references to any matters to which the auditors drew attention by way
of emphasis. The statutory accounts will be delivered to the Registrar of
Companies following the company's annual general meeting.
The accounting policies adopted in the preparation of this preliminary
announcement are consistent with those set out in the latest Group Annual
financial statements. There is no material seasonality associated with the
Group's activities.
Going concern
The Group is strongly capitalised, has considerable liquidity together with a
number of long term contracts with its customers many of which are household
names. The Group also has strong diversity in terms of customer spread,
investment location and property sector.
The Directors believe the Group is very well placed to manage its business
risks successfully and have a good expectation that both the Company and the
Group have adequate resources to continue their operations. For these
reasons they continue to adopt the going concern basis in preparing the
financial statements.
1. Dividends
Amounts recognised as distributions to equity holders in the period:
2014£'000 2013£'000
Final dividend for the year ended 31 December 2014 of 9p per share (2013 of 9p per share) 1,546 1,518
Interim dividend for the year ended 31 December 2014 of 3p per share (2013 of 3p per share) 525 516
2,071 2,034
The Directors recommend a payment of a final dividend, for the year ended 31
December 2014 of 9p per share (2013 - 9p), following the interim dividend paid
on 25 November 2014 of 3p per share. The final dividend of 9p per share will
be payable on 31 July 2015 to shareholders on the register at the close of
business on 19 June 2015 (Ex dividend on 18 June 2015). The full dividend for
the year ended 31 December 2014 is anticipated to be 12p per share.
The shareholders will have the option of a scrip dividend for the 2014 final
dividend of 9p per share, with the default option being cash.
2. Earnings per ordinary share (basic and diluted)
The calculation of profit per ordinary share is based on profit, after
excluding non-controlling interests, being a profit of £4,650,000 (2013 -
£7,094,000) and on 17,336,791 ordinary shares being the weighted average
number of ordinary shares in issue during the year (2013 - 17,027,644). There
are no potential ordinary shares in existence.
3. Investment property
Investment Properties
£'000
Fair value
At 1 January 2013 153,156
Additions 5,326
Disposals (1,790)
Transferred to stock properties (253)
Transferred from stock properties 1,005
Fair value adjustment on property held on operating leases (2)
Revaluation increase 742
At 1 January 2014 158,184
Additions 3,171
Disposals (1,250)
Transferred from stock properties 200
Fair value adjustment on property held on operating leases (3)
Revaluation increase 13,110
At 31 December 2014 173,412
Carrying amount
At 31 December 2014 173,412
At 31 December 2013 158,184
At 31 December 2014, £133,740,000 (2013 - £115,119,000) and £39,672,000 (2013
- £43,065,000) included within investment properties relates to freehold and
leasehold properties respectively.
On the historical cost basis, investment properties would have been included
as follows:
2014 2013
£'000 £'000
Cost of investment properties 118,243 114,716
The Group has pledged £158,823,000 of investment property (2013 -
£143,006,000) as security for the loan facilities granted to the Group.
Costs relating to ongoing and potential developments are included in additions
to investment properties and in the year ended 31 December 2014 amounted to
£64,000 (2013 - £42,000).
At the year end deferred consideration of £nil (2013 - £300,000) was
payable.
The property rental income earned by the Group from its investment property,
all of which is leased out under operating leases, amounted to £12,512,000
(2013 - £12,502,000).
Property valuations are complex, require a degree of judgement and are based
on data some of which is publicly available and some that is not. Consistent
with EPRA guidance, we have classified the valuations of our property
portfolio as level 3 as defined by IFRS 13 Fair Value Measurement. Level 3
means that the valuation model cannot rely on inputs that are directly
available from an active market; however there are related inputs from auction
results that can be used as a basis. These inputs are analysed by segment in
relation to the property portfolio. All other factors remaining constant, an
increase in rental income would increase valuation, whilst an increase in
equivalent nominal yield would result in a fall in value and vice versa.
In establishing fair value the most significant unobservable input is
considered to be the appropriate yield to apply to the rental income. This is
based on a number of factors including financial covenant strength of the
tenant, location, marketability of the unit if it were to become vacant,
quality of property and potential alternative uses.
Yields applied across the core portfolio are in the range of 6.5% - 11.0% with
the average yield being 8.5%. Assuming all else stayed the same; a decrease
of 1.0% in the average yield would result in an increase in fair value of
£19,627,000. An increase of 1.0% in the average yield would result in a
corresponding decrease in fair value.
The property valuations were carried out independently by GL Hearn at 31
December 2014. The property valuations at 31 December 2013 were all carried
out internally by Directors, two of whom are members of the Royal Institution
of Chartered Surveyors (RICS). The valuation methodology by both parties was
in accordance with The RICS Appraisal and Valuation Standards (9th Edition -
January 2014), which is consistent with the required IFRS 13 methodology.
IFRS 13 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.
For some properties, valuation was based on an end development rather than
investment income in order to achieve highest and best use value. To get the
valuation in this instance the end development is discounted by profit for a
developer and cost to build to get to the base estimated market value of
investment.
The amount of unrealised gains or losses on investment properties is charged
to the income statement as the movement in fair value of investment
properties, for 2014 this was a fair value gain of £13,110,000 (2013 - fair
vale gain of £742,000). The amount of realised gains or losses is shown as
the profit/ (loss) on disposal of investment properties within the income
statement, for 2014 there was a realised loss of £57,000 (2013 - gain of
£385,000).
4. Derivative financial instruments
The main risks arising from the Group's financial instruments are those
related to interest rate movements. Whilst there are no formal procedures for
managing exposure to interest rate fluctuations, the Board continually reviews
the situation and makes decisions accordingly. Hence, the Company will, as far
as possible, enter into fixed interest rate swap arrangements. The purpose of
such transactions is to manage the interest rate risks arising from the
Group's operations and its sources of finance.
2014 2013
Bank loans £'000 £'000
Interest is charged as to: Rate Rate
Fixed/ Hedged
HSBC Bank plc* 35,000 7.06% 35,000 7.06%
HSBC Bank plc** 25,000 6.63% 25,000 6.63%
Unamortised loan arrangement fees (182) (433)
Floating element
HSBC Bank plc 11,497 11,300
Natwest Bank plc 883 1,033
72,198 71,900
Bank loans totalling £60,000,000 (2013 - £60,000,000) are fixed using interest
rate swaps removing the Group 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 amount Average rate Duration of contract remaining 2014Fair value 2013Fair value
£'000 'years' £'000 £'000
Derivative Financial Liability
Interest rate swap 35,000 5.06% 23.69 (19,282) (10,599)
Interest rate swap 25,000 4.63% 6.92 (5,193) (4,063)
(24,475) (14,662)
Net fair value gain/ (loss) on derivative financial assets (9,813) 6,043
* Fixed rate came into effect on 1 September 2008. Rate includes 2% margin.
The contract includes mutual breaks, the first potential one was on 23
November 2014 (and every 5 years thereafter).
** This arrangement came into effect on 1 December 2011 when HSBC exercised an
option to enter the Group into this interest swap arrangement. The rate shown
includes a 2% margin. This contract includes a mutual break on the fifth
anniversary and its duration is until 1 December 2021.
Interest rate derivatives are shown at fair value in the income statement, and
are classified as level 2 in the fair value hierarchy specified in IFRS 13.
The vast majority of the derivative financial liabilities are due in over one
year and therefore they have been disclosed as all due in over one year.
The above fair values are based on quotations from the Group's banks and
Directors' valuation.
Interest rate risk
For the year ended 31 December 2014, if on average the 3 month LIBOR over the
year had been 100 basis points (1%) higher with all other variables held
constant, under the financing structure in place at the year end, profit
before tax for the year would have been approximately £124,000 lower (2013:
£110,000 lower). This analysis excludes any affect this rate adjustment might
have on expectations of future interest rates movements which is likely to
affect the estimation of the fair value of the derivative financial assets/
liabilities (as this movement would also be shown within the income statement
affecting post-tax profit or loss), but indicates the likely cash saving/
(cost) a 100 basis points (1%) movement would have had for the Group.
Treasury management
The long-term funding of the Group is maintained by three main methods, all
with their own benefits. The Group has equity finance, has surplus profits
and cash flow which can be utilised, and also has loan facilities with
financial institutions. The various available sources provide the Group with
more flexibility in matching the suitable type of financing to the business
activity and ensure long-term capital requirements are satisfied. Please also
see the Financial Risk management: Objectives, policies and processes for
managing risk, of the Group Strategic Report.
5. Events after the statement of financial position date
See note 7 for details of the sale of share in Beale PLC. After the year end
the Directors of the Group have made the decision to stop marketing MRG
Systems Limited for sale.
6. Investment in associate undertaking
The Group purchased a 25% interest, being 150,000 ordinary shares of £1 each
(newly issued share capital for cash) in Wimbledon Studios Limited for
£150,000 in August 2010.
On 5 August 2014, the directors of Wimbledon Studios Limited appointed KPMG
LLP as administrators when our Group would no longer fund this loss making
business.
The Group paid £75,000 to purchase fixtures that belonged to Wimbledon Studios
Limited from the administrators as they were within the building owned by the
Group and assisted with the subsequent letting of the building
7. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties of the Company, have been eliminated on consolidation and are not
disclosed in this note.
The compensation of the Group's key management personnel is shown in the
accounts (see online) as well as the Directors' emoluments in notes and the
Directors' Report.
In respect of Wimbledon Studios Limited (in administration), the Group was
owed an overdraft facility of £622,000, rent and insurance of £1,200,000. It
is unlikely that the administration will lead to any repayment of these debts.
Accordingly, all overdue debts have been fully provided against.
Included in other receivables Panther Securities PLC has a loan to a director
of Wimbledon Studios Limited of £62,500, in order for him to be able to
purchase his shareholding in that company. The loan is unsecured for a
maximum term of 3 years and attracts interest of 4% per annum. This has been
fully provided againstas it is unlikely that the Group will seek repayment of
this loan.
A deal assistance fee of £250,000 was paid to Wenhedge Ltd, a privately owned
company of Andrew Perloff. This private company had assisted Wimbledon
Studios Ltd in surviving for 5 additional months which assisted Panther in
getting the most optimum outcome. Under an agreement with Andrew Perloff, the
Company agreed to pay such a fee in the event that a beneficial outcome was
achieved for Panther. The independent directors feel this was good value for
the service provided and the benefits of the letting can clearly be seen in
terms of valuation uplift and upfront rent received.
A lease was entered into with Airsprung Group PLC a company 100% owned by
Portnard Limited (whose shareholding in the Group and relationship is detailed
in the Directors' Report). This was a three year lease at £36,000 pa. The
independent directors are satisfied this was contracted into at arm's length.
After the year end Panther sold its entire holding in Beale PLC to English
Rose Enterprises Limited, a company 100% owned by Portnard Ltd and whose
directors are Andrew Perloff and Simon Peters. English Rose Enterprises
Limited was newly set up to make an offer for the issued shares of Beale PLC.
The offer was recommended by the Beale PLC Board and their advisers and
accepted by over 75% of the shareholder base.
Copies of the full set of Report and Accounts will be posted to shareholders
shortly, will be available from the Company's registered office at Deneway
House, 88-94 Darkes Lane, Potters Bar, Hertfordshire, EN6 1AQ and are
available for download on the Group's website www.panthersecurities.co.uk.
For further information:
Panther Securities plc: Tel: 01707 667 300
Andrew Perloff/ Simon Peters
Sanlam Securities UK Limited (Nomad and Joint Broker) Tel: 020 7628 2200
David Worlidge/ Virginia Bull
This information is provided by RNS
The company news service from the London Stock Exchange
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