REG - Panther Securities - Interim Report - six months ended 30 June 2022
22/09/2022 07:00
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RNS Number : 2252A Panther Securities PLC 22 September 2022
22 September 2022
Panther Securities PLC
(the "Company")
Interim Report for the six months ended 30 June 2022
Chairman's Statement
I am once again pleased to report our results for the six months ended 30 June
2022. We show a profit after tax of £9,958,000, compared to a profit after
tax of £8,856,000 for the first half of 2021.
As with previous periods, the major contributors to the significant profit
after tax figures are the non-cash valuation movements mainly in relation to
swap value movements.
In February 2021, the Group agreed to pay £5 million to have a variation to 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 £35 million and now has
circa 16.2 years remaining. Following the Group's variation, the Group's fixed
rate will drop on 1 September 2023 to 3.40%, saving the Group £581,000 pa in
cash flow until the end-point of the instrument.
At 30 June 2022, there was a swap liability reduction compared to that shown
at 31 December 2021 of £11,329,000 due to upward spike in the current and
future interest rates, thus contributing to the improvement of our net asset
value, which was 553p per share as at 31 December 2021 and 599p per share as
at 30 June 2022.
Secondly, we revalued our property portfolio for the half year accounts and
there was one significant event being a substantial letting at Maldon at a
higher rent of £800,000 per annum (previously £600,000 per annum) and this
resulted in a valuation increase of £2,050,000.
Rents receivable during the period under review were £6,387,000 compared to
the previous year's first half of £6,447,000. There were still some
concessions given to our tenants who had suffered due to the various
lockdowns, which are recognised in the period, but they were not
significant. Our rents appear to be strengthening, and at the end of August
our rent roll was circa £14.7 million on an annualised basis.
Disposals
There were no disposals during this period.
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
£432,000 per annum and cost £5,026,000, 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 situated in
approximately six acres. This property is located on one of the best
industrial estates in Trowbridge where demand is strong.
This unit was purchased vacant for £3,300,000 and has since been let in
August to an excellent covenant at £455,000 per annum exclusive and will
undoubtedly show a substantial value increase when we revalue for our year
end.
Developments
Peterborough
The former Beales store in Peterborough, currently partly occupied by New
Start 2020 Limited, trading as Beales, has had a planning application
submitted for a large mixed-use development of shops/offices and 125
residential units whilst retaining a substantial part of the existing
attractive Edwardian brick building façade. The current older style
department store contains approximately 145,000 sq. ft. of space unsuitable
for current retail markets and may receive a decision by the end of this year.
Barry Parade, Peckham Rye
The plans for this redevelopment of a local supermarket, shops and fourteen
flats, have been agreed in their entirety, subject to Section 106 payment
which is over and above the normal conditions. There is an appeal in
progress.
Broadstairs
This development is fully completed with eleven out of twelve flats now let.
Tesco Express is on the ground floor and opened for trade in July 2021, and
this development made a welcome addition to Broadstairs High Street. This
asset at the time of writing was producing £180,000 per annum.
Swindon
Whilst everything with regard to the two planning permissions on this central
Swindon site have been agreed, progress has been slow due to the council
requiring some complicated clauses in the new 250 year lease, the overall
financial terms of which were previously provisionally agreed.
Whilst we expect to resolve these issues soon, the delay is disappointing but,
in due course, the improvement to the former covered market site will take
place.
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. This final dividend for the year ended 31 December 2021 is
accrued in these accounts as it was not paid until after the period end (but
was approved by shareholders).
We are declaring an interim dividend for the year ending 31 December 2022 of
6p per share to be paid on 20 October 2022 to shareholders on the register at
7 October 2022 (ex-dividend 6 October 2022). We expect to maintain our
dividend for the full year.
Future progress
The country, both the public and businesses, finally having substantially
recovered from the problems caused by the coronavirus pandemic, have now been
thrown into a further period of uncertainty by the problems caused by the
Russian invasion of the Ukraine.
I suspect that, like myself, most of us were unaware of the now obvious
repercussions of this unwarranted invasion of the Ukraine. The fact that
Russia is one of the world's largest oil and gas producers and the major
supplier of Europe's energy has enabled it to weaponise this position to bring
pressure on all of its opponents who are horrified by its actions. Russia's
ability to blockade the Ukraine's export of wheat when it is one of the
world's major producers together with its ability to restrict the flow of gas
into Europe has caused an upward burst in world inflation, especially in
energy costs, which for some users will triple over three years and which will
cause major problems for many small and large businesses and the vast majority
of our population.
We are all currently awaiting what measures our government will take to
alleviate this very difficult situation.
In this environment caution is our watch word and, thus, our Group will act
accordingly.
Andrew S Perloff
Chairman
22 September 2022
Chairman's Ramblings
On Thursday, 8(th) September, our much-admired and loved Queen Elizabeth II
died rather suddenly, only two days after receiving the resignation of her
Prime Minister, Boris Johnson and inviting Liz Truss to take over his role.
Although a great admirer and supporter of the monarchy and our late Queen, in
particular, possibly because my earliest memories start with viewing on a TV
especially purchased to view her Coronation which was televised for the first
time in June 1953. I do not feel qualified to comment further as we have heard
and read so many eloquent and touching comments of our Queen's service to our
country, and via our modern media, we have also visually seen the affection in
which so many people held her. Having lived 90% of my life under her reign,
I consider myself an Elizabethan.
Whilst it is too early to comment on our new Prime Minister after she has had
only a few weeks in power, I wish her good luck in her desire to improve our
country, and would add that I like many of her proposed ideas which she set
out in her successful campaign to be chosen as the new Conservative leader
and, thus, Prime Minister.
Of course, only time will tell what her performance will be in what is
probably the most important and difficult job in our United Kingdom.
Panther Securities P.L.C.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2022
Six months Six months Year
Notes
ended ended ended
30 June 30 June 31 December
2022 2021 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Revenue 2 6,387 6,447 13,172
Cost of sales 2 (2,891) (1,838) (4,651)
Gross profit 3,496 4,609 8,521
Other income 325 321 958
Administrative expenses (699) (830) (1,492)
Bad debt expense (858) (658) (286)
Operating profit 2,264 3,442 7,701
Profit on disposal of investment properties - 88 701
Movement in fair value of investment properties 6 2,050 1,213 961
4,314 4,743 9,363
Finance costs - interest (1,385) (969) (2,322)
Finance costs - swap interest (954) (1,439) (2,806)
Finance costs - swap variation 7 - (5,000) (5,000)
Investment income 10 17 29
Loss realised on the disposal of investments (shares) - (100) (96)
Fair value gain on derivative financial liabilities 7 11,329 14,326 16,754
Profit before income tax 13,314 11,578 15,922
Income tax expense 3 (3,356) (2,722) (2,411)
Profit for the period 9,958 8,856 13,511
Earnings per share
Basic and diluted - continuing operations 5 56.5p 50.1p 76.4p
Panther Securities P.L.C.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2022
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Profit for the period 9,958 8,856 13,511
Items that will not be reclassified subsequently to profit or loss
Movement in fair value of investments taken to equity (47) 77 55
Deferred tax relating to movement in fair value of investments taken to equity 12 (15) (14)
Realised fair value on disposal of investments previously taken to equity - 143 148
Realised deferred tax relating to disposal of investments previously taken to - (27)
equity
(37)
Other comprehensive (loss)/income for the period, net of tax (35) 178
152
Total comprehensive income for the period 9,923 9,034 13,663
Attributable to:
Equity holders of the parent 9,923 9,034 13,663
9,923 9,034 13,663
Panther Securities P.L.C.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Company number 293147
As at 30 June 2022
30 June 30 June 31 December
Notes
2022 2021 2021
£'000 £'000 £'000
ASSETS Unaudited Unaudited Audited
Non-current assets
Investment properties 6 177,723 182,031 167,384
Deferred tax asset 8 - 1,049 2,252
Right of use asset 296 335 298
Investments 304 335 292
178,323 183,750 170,226
Current assets
Stock properties 350 350 350
Investments 29 29 29
Trade and other receivables 3,383 3,873 2,996
Cash and cash equivalents (restricted) 4 1,052 5,009
Cash and cash equivalents 5,534 3,377 8,343
9,300 8,681 16,727
Total assets 187,623 192,431 186,953
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 (482) (213) (213)
Capital redemption reserve 604 604 604
Retained earnings 95,265 82,835 87,464
Total equity 105,315 93,154 97,783
Non-current liabilities
Long-term borrowings 7 58,910 18 55,513
Derivative financial liability 7 3,926 17,683 15,255
Deferred tax liability 8 1,092 - -
Leases 8,353 8,339 8,353
72,281 26,040 79,121
Current liabilities
Trade and other payables 8,202 8,922 9,361
Accrued dividend payable 4 1,061 1,061 -
Short-term borrowings 7 500 63,066 560
Current tax payable 264 188 471
10,027 73,237 10,049
Total liabilities 82,308 99,277 89,170
Total equity and liabilities 187,623 192,431 186,953
Panther Securities P.L.C.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2022
Share Share premium Capital redemption Retained earnings Total
capital Treasury shares reserve
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021 (audited) 4,437 5,491 604 75,923 86,242
(213)
Total comprehensive income for the period - - - 9,034 9,034
-
Dividends paid - - - - (1,061) (1,061)
Dividends due - - - - (1,061) (1,061)
Balance at 30 June 2021 (unaudited) 4,437 5,491 604 82,835 93,154
(213)
Balance at 1 January 2021 (audited) 4,437 5,491 604 75,923 86,242
(213)
Total comprehensive income for the period - - - 13,663 13,663
-
Dividends paid - - - - (2,122) (2,122)
Balance at 1 January 2022 (audited) 4,437 5,491 604
(213) 87,464 97,783
Total comprehensive income for the period - - - 9,923 9,923
-
Treasury shares purchased - - (269) - - (269)
Dividends paid - - - - (1,061) (1,061)
Dividends due - - - - (1,061) (1,061)
Balance at 30 June 2022 (unaudited) 4,437 5,491 604 95,265 105,315
(482)
Panther Securities P.L.C.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2022
30 June 30 June 31 December
Notes
2022 2021 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Cash flows from operating activities
Operating profit 2,264 3,442 7,701
Less: Rent paid treated as interest (343) (343) (687)
Profit before working capital change 1,921 3,099
7,014
(Increase)/decrease in receivables (387) 351 929
(Decrease) in payables (573) (104) (48)
Cash generated from operations 961 3,346 7,895
Interest paid (1,848) (2,064) (4,295)
Income tax paid (208) - (620)
Net cash (used in)/generated from operating activities (1,095) 1,282
2,980
Cash flows from investing activities
Purchase of investment properties (8,529) (569) (832)
Purchase of investments** (60) (6) (6)
Proceeds from sale of investment property - 178 15,841
Proceeds from sale of investments** - 403 435
Dividend income received 8 17 21
Interest income received 2 - 8
Net cash (used in)/generated from investing activities (8,579) 23 15,467
Cash flows from financing activities
New loans received 8,500 - 6,000
Finance cost (SWAP variation) - (5,000) (5,000)
Repayments of loans (5,060) (33) (12,057)
Loan amortisation repayments (250) - (250)
Purchase of own shares (269) - -
Loan arrangement fees - - (884)
Dividends paid (1,061) (1,061) (2,122)
Net cash generated from/ (used in) financing activities 1,860 (6,094) (14,313)
Net (decrease)/increase in cash and cash equivalents (7,814) (4,789) 4,134
Cash and cash equivalents at the beginning of period* 13,352 9,218 9,218
Cash and cash equivalents at the end of period* 5,538 4,429 13,352
* Of this balance £4,000 (30 June 2021: £1,052,000, 31 December 2021:
£5,009,000) 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.
1. Basis of preparation of interim financial statements
The results for the year ended 31 December 2021 have been audited whilst the
results for the six months ended 30 June 2021 and 30 June 2022 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 2021 which
were prepared in accordance with UK-adopted international accounting standards
("IFRS"), were filed with the Registrar of Companies. The auditors reported
on these accounts, their report was unqualified and did not included a
reference to any matters to which the auditors drew attention by way of
emphasis 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 2022. They have been prepared in accordance with UK
adopted international accounting standards in conformity with the requirements
of the Companies Act 2006.
A number of new and amended standards and interpretations are effective from 1
January 2022 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
2022 2021 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Current period UK corporation tax - - (971)
Prior period UK corporation tax - - 67
- - (904)
Current period deferred tax expense (3,356) (2,722) (1,507)
Income tax expense for the period (3,356) (2,722) (2,411)
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
2022 2021 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Final dividend for the year ended 31 December 2021 of 6p (2020 - 6p) per share 1,061* 1,061* 1,061
Interim dividend for the year ended 31 December 2021 of 6p (2020 - 6p) per 1,061 1,061 1,061
share
2,122 2,122 2,122
The final dividend of 6p per share for the year ended 31 December 2021 (and
2020) was not paid during the period to 30 June 2022 but declared and approved
(being accrued in these accounts) and was paid on 20 July 2022 (14 October
2021).
*Accrued at half year and paid after period end.
5. Earnings per share (basic and diluted)
The calculation of basic and diluted earnings per ordinary share is based on
earnings being a profit of £9,958,000 (30 June 2021 - £8,856,000 and 31
December 2021 - £13,511,000).
The basic earnings per share is based on the weighted average of the ordinary
shares in existence throughout the period, being 17,628,469 to 30 June 2022
(17,683,469 to 31 December 2021 and 17,683,469 to 30 June 2021). There are
no potential shares in existence for any period and therefore diluted and
basic earnings per share are equal.
Panther Securities PLC owns 173,460 ordinary shares which are currently held
in treasury (2021 - 63,460).
6. Investment properties
30 June 30 June 31 December
2022 2021 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Fair value of investment properties
At 1 January 167,384 180,975 180,975
Additions 8,289 233 537
Disposals - (390) (15,140)
Fair value adjustment on investment properties held on leases
- - 51
Revaluation increase/ (decrease) 2,050 1,213 961
At period end 177,723 182,031 167,384
The Directors undertook the valuation as at 30 June 2022 and 31 December 2021,
however an independent valuation by Carter Jonas at as July 2021 was used as
at the 30 June 2021 (and also used as a starting point for the Directors'
valuation for the year ended 31 December 2021).
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
2022 2021 2021
£'000 £'000 £'000
Bank loans Unaudited Rate Unaudited Rate Audited Rate
Interest is charged as to:
Fixed/ Hedged
HSBC Bank plc* 35,000 7.76% 35,000 7.01% 35,000 7.76%
HSBC Bank plc - - 25,000 6.58% - -
Santander Bank plc 25,000 4.71% - - 25,000 4.71%
Unamortised loan arrangement fees (590) - - - (737) -
Floating element
HSBC Bank plc - 3,000 (3,250)
Shawbrook Bank plc - 84 60
59,410 63,084 56,073
* Fixed rate came into effect on 1 September 2008 and lasts for 30 years.
The rate includes 2.70% margin (1.95% prior to 16 July 2021). There are no
breaks and the rate drops to 3.40% on 1 September 2023 to the end of its term
on 31 August 2038.
Bank loans totalling £60,000,000 (2021 - £60,000,000) are fixed using
interest rate swaps removing the Group's exposure to interest rate risk. The
remaining borrowings are arranged at floating rates, thus exposing the Group
to cash flow interest rate risk. The Group at the period end had a
£54,500,000 term facility (after loan amortisation repayments) and a
£11,000,000 revolving (with only £5,500,000 drawn).
The derivative financial assets and liabilities are designated as held for
trading.
Hedged amount Rate (without margin) Duration of contract remaining 30 June 2022 30 June 2021 31 December 2021
Fair value Fair value Fair value
£'000 years £'000 £'000 £'000
Unaudited Unaudited Audited
Derivative financial liability
Interest rate swap* 35,000 5.060% 16.19 (4,676) (14,169) (12,833)
Interest rate swap** 25,000 4.630% - - (512) -
Interest rate swap 25,000 2.013% 9.42 750 (3,002) (2,422)
(3,926) (17,683) (15,255)
Movement in derivative financial liabilities 11,329 14,326 16,754
*The Group has paid £5m in February 2021 to vary this long-term swap
agreement. The agreement varied the fixed rate previously at 5.06% until 31
August 2038 on a nominal value of £35m. Following the variation, the Group's
fixed rate will drop on 1 September 2023 to 3.40% saving the Group circa
£581,000pa in cash flow until the end point of the instrument.
**This swap agreement ended on 30 November 2021.
As the Group's new loan facility entered into in July 2021 is referenced to
SONIA rather than LIBOR, the Group recently altered its swap agreements onto
the same basis.
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.
8. Deferred taxation
The following are the major deferred tax assets and liabilities recognised by
the Group, and the movements thereon, during the current and prior reporting
periods.
Total
£'000
Asset at 1 January 2021 3,810
Debit to equity for the year (51)
Debit to Income Statement for the year (1,507)
Asset at 1 January 2022 2,252
Debit to equity for the period 12
Debit to Income Statement for the period (3,356)
Liability at 30 June 2022 (1,092)
Deferred taxation arises in relation to:
Deferred tax
30 June 2022 30 June 2021 31 December 2021
£'000 £'000 £'000
Deferred tax liabilities:
Investment properties (2,540) (2,678) (2,016)
Deferred tax assets:
Tax allowances in excess of book value 323 271 323
Fair value of investments 143 96 131
Derivative financial liability 982 3,360 3,814
Net deferred tax asset (1,092) 1,049 2,252
As at 30 June 2022 the substantively enacted rate was 25% (30 June 2021: 19%
and 31 December 2021: 25%) and this has been used for the deferred tax
calculation.
9. Net asset value per share
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
Basic and diluted 599p 527p 553p
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 (http://www.pantherplc.com) .
For further information:
Panther Securities
plc:
Tel: 01707 667 300
Andrew Perloff / Simon Peters
Allenby Capital Limited (Nomad and Joint
Broker) Tel:
020 3328 5656
David Worlidge / Alex Brearley
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