REG-Panther Securities: Interim Report – Six months ended 30 June 2020
16/10/2020 07:00
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 PLC
Interim Report – Six months ended 30 June 2020
Chairman’s Statement
As always I am pleased to report our results for the six months ended 30 June
2020. The loss shown is £8,049,000 after a tax credit of £2,269,000
compared to a profit after tax of £684,000 for the prior year first half.
This loss is caused by two major non-cash adjustments, firstly the fair value
loss on our derivative “swaps” totalling £3,849,000 and secondly a
£6,929,000 downward valuation adjustment to our portfolio to reflect the
“COVID factor” problems that are affecting the entire business
community. This creates lower demand and thus lower values in different
parts of our commercial portfolio, mainly some of the retail properties. The
adjustments, although non-cash flow items, do affect our Statement of
Financial Position and until both interest rates rise and normal property
business activity is resumed they will have adverse effects.
Our rents receivable in this accounting period amount to £6,836,000, slightly
less than the comparable period last year of £7,023,000. This drop was
mainly caused by the Beales group sudden administration before the COIVD
lockdown was announced. Before lockdown it was anticipated that some of the
Beales units would have continued trading under different ownership.
However, this rental loss was reduced by a payment in respect of a third party
guarantee on two of their stores, shown in other income.
I suspect our second half rental income will be further impacted by the
concessions we have given to our tenants who were badly affected by the
enforced closure of their businesses.
We believe about 42% of our tenants, by total income, were not affected by the
enforced closures and indeed some have been busier as they were providing the
vital services communities rely upon.
Central Government with the issued code of conduct urged landlords to treat
tenants as partners (as indeed they are) and assist where possible and of
course we tried to do “our bit to help”.
Between April and October 2020, we gave about forty-eight of our tenants
approximately £247,000 in rent waiver concessions and also agreed a number of
deferment concessions, every concession being individually carefully
considered on its merits.
However, out of the few (about 5) of our own freehold landlords, being local
councils who receive about £675,000 p.a. ground rents from us, they, having
considered the matter, have given us a concession of absolutely nothing.
Central Government could have instructed all councils to share the concessions
given to the trading occupiers forced upon Landlords by the actions taken to
combat the virus but I believe our bureaucratic Treasury advisors, who advise
Ministers and the MPs who should be making the final decisions, are so
inexperienced in these matters they do not understand a sensible and fair way
of alleviating the problems.
If a shop is forced to close or reduce its trading estate causing it to vacate
premises despite receiving a nil rates Government concession, this rates
burden falls upon the landlord without concessions or grants…. some
partnership!
Disposals
We sold a small warehouse in West Street, Southport, formerly used by Beales
Southport store, for £250,000 which was a small £25,000 profit.
Acquisitions
In April 2020 we purchased, under a long-term previous agreement, the freehold
of 26-36 & 3-5 Harpur Street, Bedford, a former Beales store, situated in the
best position in Bedford. The cost was £3,475,000 including the excessive
stamp duty payable. We consider the rental value is about £300,000 p.a. and
believe the upper part of the property has residential development potential.
Developments
Councils put most of our planning applications and development investigations
on the back burner after COVID-19 measures were brought in. The previously
mentioned schemes in Bishop Auckland, Swindon and Barry Parade in Peckham are
still moving forward, albeit slowly.
High Street, Broadstairs
During this account period we spent approximately £500,000 (and even more
will be spent in our second half) on our development in Broadstairs, the
ground floor of which has been pre-let as a Tesco Express store for £55,000
pa. I have previously stated we intend to hold the property as a long term
investment so the twelve flats above, some of which have sea views, will be
let after completion. Progress on this site since commencement has
progressed surprisingly well and I am pleased to report the roof is
finished. We anticipate completion by the end of January 2021. When fully
let and occupied, this should produce an additional £165,000 p.a. rent and
also add value to our investment.
Wickford
We were able to buy back a block of four dilapidated long leasehold factory
units in Wickford, totalling 20,000 sq ft, for a total cost of £250,000,
where we already owned the freehold in our Wickford Industrial estate, which
has a total of 24 units. We had been seeking planning permission on the 6
dilapidated units, on a separate 1.5 acre freehold site, as a residential
site. We obtained planning permission for residential development on this
site, which required the acquisition of two adjoining freehold units which is
now regarded as unlikely. We now have the ability to rebuild modern
warehouse/industrial units totalling about 30,000 sq ft on this site for which
there is strong demand. This would still be a profitable scheme as
industrial rentals have risen considerably since our original residential
proposals.
Business Rates
Last year I mentioned the Government’s failure to deal with the absurdity of
business rates which first began with the abolition of relief for vacant
commercial units, then was put in a pickle by deferring, for two years, a
revaluation of the Rateable Values which would have given the first piece of
relief for those paying excessive business rates. This delay meant that when
the revaluation actually came about there had been further falls in Rateable
Values that would have caused the Treasury to have an even bigger reduction in
revenue and thus the Treasury implemented a phasing arrangement that produced
the effect that those retailers that had been worst hit by the downturn in
trade (caused by a loss of trade to the internet) were forced to subsidise
those retail traders who were mainly Central London based and thus bolstered
by a successful tourist business.
Additionally, forced increases in minimum wage and other additional taxes such
as carbon tax, insurance tax and apprenticeship tax which all businesses had
to bear, proved excessively onerous for High Street traders, particularly
department stores who need more staff. I wonder if the 250,000 retail and
associated workers who are or will be out of work shortly feel the two
years’ extra wages were worth the loss of a well-loved job that could have
continued until they retired; but such is the incompetence of our Government.
When one considers Marks & Spencer, House of Fraser, Debenhams, Beales and
John Lewis, amongst many others, have all either had to take drastic action or
failed (which is always detrimental to staff) it is evident that something
does not add up in our system of taxation of retail shop traders.
When the Government measures to protect the population from the “COVID
virus” were introduced it was the final straw that caused the property-based
retail industry to fail in ever larger numbers with consequent effects on
their suppliers and also those companies that service retailers. The
consequences of the huge amount of job losses and desolation of our high
streets causes other social problems which will come to prominence in due
course.
If our Government had listened to informed people in the industry and acted
earlier on the numerous calls for lessening the tax burden on this vital part
of our business community instead of squeezing them until the pips squeak, the
retail industry would have been better able to withstand the “pandemic
problems” and save the jobs of hundreds of thousands of people who will now
be needing Government financial support.
COVID Effects
The business has now traded two quarters that have been affected by
COVID-19.
When we compare how much cash the business collected from 2 December 2019 to 2
March 2020, a period which was not affected by COVID-19, as a benchmark and
the closest comparable to “normal”, then the group collected over 70% of
the previous level of cash in the subsequent two quarters to 2 September
2020. The cash collection is a good measure as it shows the true funds
flowing into the business and is not distorted by credit notes or
concessions. The rent collected on the last period to 2 September 2020, was
£3.467m or over 3 times the interest due for that period.
On the income statement we show a larger than normal bad debt provision of
£1.474m, which is more than we have provided for in the past. The directors
believe the business may not require this full provision but as we are still
mid-pandemic have taken a prudent view.
Finance
We are at an advanced stage in the talks to renew our current facilities,
which expire in April 2021, with most matters agreed. The loan is subject to
a finalised external revaluation and final lenders’ credit committee
approval. We maintain a strong cordial relationship with our longstanding
club of lenders and will update shareholders in due course.
Cash
As stated above, we are currently receiving about 76% of our pre-COVID rental
income. This is more than sufficient to pay all current interest costs and
other running costs. Whilst we are conserving cash as much as possible,
which currently stands at over £8 million, as always we are prepared to
consider exciting property proposals that offer above average or secure income
prospects. I suspect there will be many possibilities in these unprecedented
times.
Dividends
We paid a final dividend of 6p per share on 7 September 2020 in respect for
the year ended 31 December 2019.
The Directors hope to be in a position to be able to declare a 6p interim for
the year ending 31 December 2020 in February 2021, but such declaration will
be subject to gaining a clearer understanding of COVID-19 and its financial
effects on our Group so there can be no certainty that such a dividend will be
declared.
Andrew S Perloff
Chairman
16 October 2020
Chairman’s Ramblings
About 50 years ago, when I first embarked on my budding career in property, I
worked with two partners as a self-employed estate agent, ensconced in a tiny
shop/office in a high street north of London. We dealt mainly with
residential property but I only had limited experience in the commercial and
investment side of the property business – and my jealously guarded 50 sq ft
of office space were devoted to this.
I had managed to compile a long list of potential investors prior to leaving
my previous firm and although the property business seemed much less
complicated in those days, if our business was said to be initially slow it
would have been a massive overstatement.
I did, however, manage at one point to obtain instructions on a house in
Kensington. It had been divided into 6 flats and the freehold asking price
was £18,000. We advertised it in the Evening Standard which seems rather
antiquated in view of the internet nowadays but it was successful as almost
immediately we started receiving numerous calls and offers until they reached
£19,500. One very eager and persistent potential purchaser was a young man
from south London who, although extremely keen on sealing a deal, dropped out
quite early on. I, of course, kept his details on file but really did not
see him as potential client.
Some months later, an agent with whom I dealt regularly, agreed to buy a block
of flats for one of his clients who subsequently went on to buy 2 or 3 further
substantial properties via our joint agencies. It was proving to be a very
successful relationship and to my surprise, the purchaser turned out to be the
young man I had added to my list but with whom I foolishly hadn’t bothered
with!
Soon after I made direct contact with him and became very busy acquiring,
selling and advising this young man on many property transactions. He then
acquired, through us, his first publicly quoted property company. He became
one of our best clients, always reliably and promptly paying fees in full when
they became due and we did so well that with the high level of fees earned we
were able to start to trade in low value properties on our own account.
At one point, he asked me to advise on a potential purchase of a public
company, who owned freehold car sales sites, by viewing all of their 60 or 70
properties which were located across the country. We normally operated
within the Greater London area and would only expect a fee if he actually
bought the company and then only after and on each individual sale we had
made.
I wanted a fee for inspecting the sites and giving advice. I explained that
it would take many weeks to travel and stay around the country to visit all
the sites. He decided to take his business elsewhere and although I was
disappointed, we were now doing very well on our own account.
I watched our former client’s meteoric rise/progress over the subsequent
years. He still dealt with property but now was also trading in companies
and shares until one day he suddenly sold control of his public company and
left the country, probably and understandably for sunnier climes and less
harsh taxation. I had no further contact with him over the ensuing years but
continued to watch his progress through newspapers with great interest.
Fast forward to some fifteen years later when I was in St Tropez with my
future wife. We were roaming about one evening, looking for somewhere on the
harbour side to eat when a heavily bearded man with his family in tow was
approaching us. “Hello Andrew! How are you?” I did not instantly
recognise him but his voice was unmistakable. We fell into easy, pleasant
conversation and he invited us out on his boat the following day. We arrived
early at the meeting point the next morning as arranged and we were astonished
to be taken aboard what was probably the largest yacht in the harbour. We
had a lovely time – my former best client was an excellent host. We sailed
around the beautiful coast of St. Tropez, having lunch which was served by
some of his numerous crew.
During lunch a small tender from town arrived to bring him all the English
papers which were, in those pre-internet days, yesterday’s editions. I was
curious as to why he wanted and read them all and he told me that if you had
any interest in business and politics it was vital to read as much as you
could, as opinions, “facts”, and viewpoints could vary hugely and by
digesting them all you were able to make your own informed conclusions.
As I looked around at his magnificent yacht, sailing gracefully through the
azure waters, I thought he must be onto something. Needless to say, upon our
return from holiday, I immediately doubled my daily newspaper order and
ordered various financial magazines for good measure. Even Private Eye!
Our paths did not cross again for another fifteen years.
I was by now running Panther House in Mount Pleasant, which was probably
London’s first business centre, a thriving business occupied by over 110
small business tenants who rented their rooms on a very simple, all-inclusive
monthly licence. The building had proved to be a cash flow gold mine for our
group for many years and a huge number of interesting businesses and
characters passed through our doors over these years.
One of these tenants was a very bright young man who had taken one of our
smaller rooms to start a business magazine which focused on just one
particular industry but obviously it was one in which he was extremely
knowledgeable.
Although he was a good tenant, it seemed to me the publication was not as
successful as he thought it would be and after three or four years, he walked
into our office and gave us his notice. I liked him and told him I was sorry
to see his business fail and that he had to leave but he surprised me by
replying that the business was doing OK but he felt he was in a rut and longed
for a change. His chance came when he spotted an advert for a head financial
journalist for a leading daily financial newspaper. He applied for it and
despite there being over 100 applicants for the job, after many interviews he
had eventually been chosen. He told me that in the final interview he had
confessed to the editor as being rather nervous as his field of expertise was
quite narrow.
The editor-in-chief who interviewed him told him that as long as you have
strong views on any business subject and can write them logically and
cogently, it doesn’t really matter if you are right or wrong as your
opinions and article are usually forgotten a week later and safely wrapping
fish and chips.
The editor was probably right at that time but with the ever improving
technology which allows information to be available so quickly and in so many
different formats, with fake news ever prevalent, it is practically impossible
to gather all the facts currently in any particular subject. Eventually it
comes down to personal judgment which is based on your own individual
experience acquired over the years.
This might explain why our Government appears to be so shambolic in most of
what they do as they are nearly all completely inexperienced in their allotted
fields but are advised by their bureaucratic advisers, who are usually as
equally inexperienced in the life experiences for the vast majority of the
population.
If we had politicians with at least 25 years’ experience in the real world
outside of politics or bureaucratic sinecures, we may get people who could
produce suitable rules and the necessary taxation to run a country
efficiently, fairly and honestly, which if understandable to the vast majority
of our population would thus also be believed and accepted.
Andrew S Perloff
Chairman
16 October 2020
Panther Securities P.L.C.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2020
Notes Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
£'000 £'000 £'000
Unaudited Unaudited Audited
Revenue 2 6,836 7,023 14,226
Cost of sales 2 (1,435) (1,240) (3,429)
Gross profit 5,401 5,783 10,797
Other income 204 66 443
Administrative expenses (742) (750) (1,676)
Bad debt expense (1,474) (538) (524)
Operating profit 3,389 4,561 9,040
Profit on disposal of investment properties 25 560 515
Movement in fair value of investment properties 6 (6,929) - (8,832)
(3,515) 4,121 723
Finance costs – interest (1,194) (1,198) (2,469)
Finance costs – swap interest (1,280) (1,197) (2,437)
Investment income 24 23 112
Impairment of investments (shares) (504) - -
Profit realised on the disposal of investments (shares) - - 105
Fair value loss on derivative financial liabilities 7 (3,849) (1,864) (997)
(Loss)/profit before income tax (10,318) 885 (4,963)
Income tax income/(expense) 3 2,269 (201) 870
(Loss)/profit for the period (8,049) 684 (4,093)
(Loss)/earnings per share
Basic and diluted – continuing operations 5 (45.5)p 3.9p (23.1)p
Panther Securities P.L.C.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2020
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
£'000 £'000 £'000
Unaudited Unaudited Audited
(Loss)/profit for the period (8,049) 684 (4,093)
Items that will not be reclassified subsequently to profit or loss
Movement in fair value of investments taken to equity - (135) (225)
Deferred tax relating to movement in fair value of investments taken to equity - 23 38
Realised fair value on disposal of investments previously taken to equity - - 48
Realised deferred tax relating to disposal of investments previously taken to equity - - (8)
Other comprehensive loss for the period, net of tax - (112) (147)
Total comprehensive (loss)/income for the period (8,049) 572 (4,240)
Attributable to:
Equity holders of the parent (8,049) 572 (4,240)
(8,049) 572 (4,240)
Panther Securities P.L.C.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Company number 293147 As at 30 June 2020
Notes 30 June 30 June 31 December
2020 2019 2019
£'000 £'000 £'000
ASSETS Unaudited Unaudited Audited
Non-current assets
Investment properties 6 166,290 170,371 169,340
Deferred tax asset 5,755 2,151 3,304
Right of use asset 351 - 373
Investments 1,016 1,715 927
173,412 174,237 173,944
Current assets
Stock properties 350 448 350
Investments 38 - 168
Current tax asset - - 601
Trade and other receivables 4,276 5,821 3,389
Cash and cash equivalents (restricted) 1,052 7,722 2,299
Cash and cash equivalents 8,340 6,788 7,186
14,056 20,779 13,993
Total assets 187,468 195,016 187,937
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Capital and reserves
Share capital 4,437 4,437 4,437
Share premium account 5,491 5,491 5,491
Treasury shares (213) (213) (213)
Capital redemption reserve 604 604 604
Retained earnings 65,517 80,568 74,627
Total equity 75,836 90,887 84,946
Non-current liabilities
Long-term borrowings 7 78 57,946 58,955
Derivative financial liability 7 30,360 27,378 26,511
Leases 7,912 7,512 7,912
38,350 92,836 93,378
Current liabilities
Trade and other payables 9,169 9,071 8,541
Accrued dividend payable 4 1,061 1,061 -
Short-term borrowings 7 62,996 1,035 1,072
Current tax payable 56 126 -
73,282 11,293 9,613
Total liabilities 111,632 104,129 102,991
Total equity and liabilities 187,468 195,016 187,937
Panther Securities P.L.C.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2020
Share capital Share premium Treasury shares Capital redemption reserve Retained earnings Total
£'000 £'000 £’000 £'000 £'000 £'000
Balance at 1 January 2019 (audited) 4,437 5,491 (213) 604 83,710 94,029
Total comprehensive income for the period - - - - 572 572
Dividends paid - - - - (2,653) (2,653)
Dividends due - - - - (1,061) (1,061)
Balance at 30 June 2019 (unaudited) 4,437 5,491 (213) 604 80,568 90,887
Balance at 1 January 2019 (audited) 4,437 5,491 (213) 604 83,710 94,029
Total comprehensive loss for the period - - - - (4,240) (4,240)
Other movements - - - - (68) (68)
Dividends paid - - - - (4,775) (4,775)
Balance at 1 January 2020 (audited) 4,437 5,491 (213) 604 74,627 84,946
Total comprehensive loss for the period - - - - (8,049) (8,049)
Dividends due - - - - (1,061) (1,061)
Balance at 30 June 2020 (unaudited) 4,437 5,491 (213) 604 65,517 75,836
Panther Securities P.L.C.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2020
Notes 30 June 30 June 31 December
2020 2019 2019
£'000 £'000 £'000
Unaudited Unaudited Audited
Cash flows from operating activities
Operating profit 3,389 4,561 9,040
Add: Depreciation and interest – right to use asset 22 - -
Add: Loss on current asset investments*** 79 - 15
Less: Transfer stock to investment properties - - (141)
Less: Rent paid treated as interest (325) (285) (651)
Profit before working capital change 3,165 4,246 8,263
Decrease/ (increase) in stock investments 130 - (168)
Decrease/ (increase) in receivables (887) (301) 1,507
Increase/ (decrease) in payables 630 (1,118) (1,802)
Cash generated from operations 3,038 2,857 7,800
Interest paid (2,067) (2,028) (4,091)
Income tax paid 475 (2,503) (3,303)
Net cash generated from/ (used in) operating activities 1,446 (1,674) 406
Cash flows from investing activities
Purchase of investment properties (4,104) (285) (8,138)
Purchase of investments** (593) - -
Purchase of current asset investments*** (2,936) - (3,996)
Proceeds from current asset investments*** 2,857 - 3,981
Proceeds from sale of investment property 250 85 1,065
Proceeds from sale of investments - - 851
Dividend income received 15 - 76
Interest income received 9 23 36
Net cash used in from investing activities (4,502) (177) (6,125)
Cash flows from financing activities
New loans received 4,000 - 1,000
Repayments of loans (1,037) (1,036) (1,071)
Dividends paid - (2,653) (4,775)
Net cash generated from/ (used in) financing activities 2,963 (3,689) (4,846)
Net decrease in cash and cash equivalents (93) (5,540) (10,566)
Cash and cash equivalents at the beginning of period* 9,485 20,050 20,050
Cash and cash equivalents at the end of period* 9,392 14,510 9,485
* Of this balance £1,052,000 (30 June 2019: £7,722,000, 31 December 2019:
£2,299,000) is restricted by the Group’s lenders i.e. it can only be used
for the purchase of investment property (or otherwise by agreement).
** Shares in listed and/or unlisted companies. These were held for longer
term growth and dividend return.
*** Shares in listed and/or unlisted companies but held for trading
purposes. These were bought in order to make short term trading profit.
NOTES TO THE ACCOUNTS
for the six months ended 30 June 2020
1. Basis of preparation of interim financial statements
The results for the year ended 31 December 2019 have been audited whilst the
results for the six months ended 30 June 2019 and 30 June 2020 are
unaudited.
The financial information set out in this interim financial report does not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The Group's statutory accounts for the year ended 31 December 2019
which were prepared under International Financial Reporting Standards
(“IFRS”) as adopted for use in the European Union, were filed with the
Registrar of Companies. The auditors reported on these accounts, their
report was unqualified but included 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 any statements under Section 498
(2) or Section 498 (3) of the Companies Act 2006.
These condensed consolidated interim financial statements are for the six
month period ended 30 June 2020. They have been prepared using accounting
policies consistent with IFRS as adopted for use in the European Union. IFRS
is subject to amendment and interpretation by the International Accounting
Standards Board (“IASB”) and the IFRS Interpretations Committee and there
is an ongoing process of review and endorsement by the European Commission.
The financial information has been prepared on the basis of IFRS that the
Board of Directors expect to be applicable as at 31 December 2020.
A number of new and amended standards and interpretations are effective from 1
January 2020 but they do not have a material effect on the Group’s financial
statements.
2. Revenue and cost of sales
The Group’s only operating segment is investment and dealing in property and
securities. All revenue, cost of sales and profit or loss before taxation is
generated in the United Kingdom. The Group is not reliant on any key
customers.
3. Income tax expense
The charge for taxation comprises the following:
30 June 30 June 31 December
2020 2019 2019
£’000 £’000 £’000
Unaudited Unaudited Audited
Current period UK corporation tax 182 518 669
Prior period UK corporation tax - - (76)
182 518 593
Current period deferred tax credit (2,451) (317) (1,463)
Income tax (credit)/expense for the period (2,269) 201 (870)
The taxation charge is calculated by applying the Directors’ best estimate
of the annual effective tax rate to the profit for the period.
4. Dividends
Amounts recognised as distributions to equity holders in the period:
30 June 30 June 31 December
2020 2019 2019
£’000 £’000 £’000
Unaudited Unaudited Audited
Special dividend for the year ended 31 December 2018 of 15p per share - 2,653 2,653
Final dividend for the year ended 31 December 2019 of 6p (2018 – 6p) per share *1,061 *1,061 1,061
Interim dividend for the year ended 31 December 2019 of 6p per share - - 1,061
1,061 3,714 4,775
The final dividend of 6p per share for the year ended 31 December 2019 (and
2018) was not paid during the period to 30 June but declared and approved
(being accrued in these accounts) and was paid on 7 September 2020 (5
September 2019).
*Accrued at half year and paid after period end.
5. (Loss)/ earnings per ordinary share (basic and diluted)
The calculation of basic and diluted earnings per ordinary share is based on
earnings being a loss of £8,049,000 (30 June 2019 – profit of £684,000 and
31 December 2019 – loss of £4,093,000).
The basic earnings per share is based on the weighted average of the ordinary
shares in existence throughout the period, being 17,683,469 to 30 June 2020
(17,683,469 to 31 December 2019 and 17,683,469 to 30 June 2019). There are
no potential shares in existence for any period therefore diluted and basic
earnings per share are equal.
In the year ended 31 December 2017 Panther Securities PLC bought 63,460
ordinary shares that it currently holds in treasury.
6. Investment properties
30 June 30 June 31 December
2020 2019 2019
£’000 £’000 £’000
Unaudited Unaudited Audited
Fair value of investment properties
At 1 January 169,340 170,236 170,236
Additions 4,104 285 8,138
Transfer from stock properties - - 239
Disposals (225) (150) (550)
Fair value adjustment on investment properties held on leases - - 109
Revaluation decrease (6,929) - (8,832)
At the end of the period 166,290 170,371 169,340
The directors have undertaken an interim valuation of the investment
properties as at 30 June 2020. There is uncertainty in the valuations as at
that date due to the lack of transactions within the market and also due to
the economic situation affected by COVID-19. The directors plan to have an
external professional valuation undertaken for the year end and would envisage
values coming down, even though the Group’s properties have performed well
over this period compared to other investment portfolios – more detail on
this and the impact of COVID-19 can be seen at note 9.
7. 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.
30 June 30 June 31 December
2020 2019 2019
£’000 £’000 £’000
Bank loans Unaudited Rate Unaudited Rate Audited Rate
Interest is charged as to:
Fixed/ Hedged
HSBC Bank plc* 35,000 7.01% 35,000 7.01% 35,000 7.01%
HSBC Bank plc** 25,000 6.58% 25,000 6.58% 25,000 6.58%
Unamortised loan arrangement fees (78) (241) (159)
Floating element
HSBC Bank plc*** 3,000 (1,000) -
Shawbrook Bank plc 152 222 186
63,074 58,981 60,027
* Fixed rate came into effect on 1 September 2008. The rate includes 1.95%
margin. The contract includes mutual breaks, the last being on 23 December
2019 (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
includes a 1.95% margin. This contract includes a mutual break on the fifth
anniversary and its duration is until 1 December 2021.
***The floating element was negative at 30 June 2019 as Panther Securities PLC
has fixed interest rate swaps for £60,000,000 but only had drawn down
£59,000,000 at the time.
Bank loans totalling £60,000,000 (2019 - £60,000,000) are fixed using
interest rate swaps removing the Group’s exposure to interest rate risk.
Other borrowings are arranged at floating rates, thus exposing the Group to
cash flow interest rate risk.
The derivative financial assets and liabilities are designated as held for
trading.
Hedged amount Rate (without margin) Duration of contract remaining 30 June 2020 Fair value 30 June 2019 Fair value 31 December 2019 Fair value
£’000 years £’000 £’000 £’000
Unaudited Unaudited Audited
Derivative financial liability
Interest rate swap 35,000 5.060% 18.18 (25,432) (22,766) (22,209)
Interest rate swap 25,000 4.630% 1.42 (1,532) (2,218) (1,792)
Interest rate swap* 25,000 2.131% 10.00 (3,396) (2,394) (2,510)
(30,360) (27,378) (26,511)
Movement in derivative financial liabilities (3,849) (1,864) (997)
*This swap commences on 1 December 2021 when the £25,000,000 4.63% swap
ceases. This swap is at a lower rate and will result in an interest saving
of circa £625,000 per annum compared to the current structure.
Interest rate derivatives are shown at fair value in the Statement of
Financial Position, with charges in fair value taken to the Income
Statement. Interest rate swaps 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.
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.
Loan renewal
The Group’s loan expires in April 2021. Positive discussions with our
lenders are onging regarding the renewal of these facilities, which the
Directors are confident will be renewed. The board believes the renewal will
complete late in December 2020 or early in 2021. However in these interim
accounts and perhaps even the full year the loan will be shown as a current
liability, even though it is the directors strong view the loan will be
renewed and not be repaid within 12 months.
8. Net asset value per share
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Basic and diluted 429p 514p 480p
9. Update on the impact of COVID-19
The business has now traded two quarters that have been affected by
COVID-19.
If you compare how much cash the business collected from 2 December 2019 to 2
March 2020, a period which was not affected by COVID-19, as a benchmark and
the closest comparable to “normal”, with the next two equivalent periods,
then the Group collected over 70% of the previous level of cash, respectively,
in the two equivalent periods. To provide more clarity regarding the cash
collection, the rent collected on the last period to 2 September 2020, was
£3.467m or almost 3 times interest due for that period.
As at 1 October 2020, the Group had agreed concessions with 48 tenants
totalling £247,000 but had also given many others time to pay - being
technically also concessions (but no loss in rent if they perform) on the
lease terms.
On the face of the income statement can be seen a larger than normal bad debt
provision of £1.474m, this is based on the ageing profile and is more than we
have provided for in the past – it is 2 to 3 times larger than has
historically been provided for in a normal half year. The directors believe
the business will not require this full provision but as we are still
mid-pandemic have taken a prudent view.
Overall even though accounts reflect a downward revaluation in the properties
as pointed out in Note 6 there is of course uncertainty over the valuation due
to lack of transactions within the market and the situation regarding
COVID-19. The Group will engage an external professional valuer for the year
end and incorporate their valuation figures at the year-end but expect a
downward movement for the full year.
In terms of why the Group’s properties have performed satisfactory the
board’s analysis of this as follows. As already announced 42% of
businesses tenants by income were not required to close during lock-down –
this no doubt helped and is a testament to the diversification achieved within
the Group’s investment portfolio which includes industrial, office and
retail unit users as well as residential tenants. The business also has
benefited from our retail having a significant element in local neighbourhood
parades or secondary high streets, whilst the footfall in central London,
other major cities and shopping centres has fallen that footfall has stayed at
home. As such the local shops and smaller high street locations have traded
better as they are used by people working from home or being furloughed.
Also, the government grants for shops of £25,000 or £10,000 was more
meaningful for a typical Group property, being smaller secondary traders,
meaning they could more easily meet their commitments. The other big
difference is that the smaller traders, even though they may be aware that
Landlords have had their powers to take action diminished, are more concerned
about keeping goodwill and maintaining a good relationship, as these
businesses can often be their main or only livelihood and they are not purely
making a decision based on contribution or loss to a large groups profit and
loss account. Whereas many of the larger named traders are being more
aggressive and making decisions based on pure financials. Also comparing the
Group’s typical secondary to those more prime trading positions, the prime
positions pre-COVID usually have high footfall and need it to cover the high
costs. With footfall in prime locations being significantly diminished the
traders cannot afford or justify their high rents and service charges where
applicable – whereas the secondary positions position footfall is likely to
have remained consistent or even improved in some cases - providing local
services and convenience.
As a Group we have maintained strong cash balances and have good relationships
with our long term lenders, who agree with our analysis that our business
model has been robust over this period, as such we are in a relative strong
position.
10. Copies of this report are to be sent to all shareholders and are
available from the Company’s registered office at Unicorn House, Station
Close, Potters Bar, EN6 1TL and will also be available for download from our
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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