ANNUAL REPORT & FINANCIAL STATEMENTS 2014 Company number 293147 The Year in Brief Revenue Profit before tax Total comprehensive income for the year Net assets of the Group 2014 £’000 12,512 4,210 4,692 71,554 2013 £’000 12,502 8,241 6,953 67,916 Earnings per 25p ordinary share – continuing operations 26.1p 42.0p Dividend per ordinary share (based on those proposed in relation to the financial year) Net assets attributable to ordinary shareholders per 25p ordinary share **3p is paid and 9p proposed 12p** 409p 12p 395p Contents The Year in Brief Directors, Secretary and Advisers Chairman’s Statement Chairman’s Ramblings Group Strategic Report Directors’ Report Corporate Governance Independent Auditors’ Report Consolidated Income Statement Consolidated Statement of Comprehensive Income 1 2 3 8 12 15 18 20 22 23 1 Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Accounts Parent Company Balance Sheet Parent Company Cash Flow Statement Notes to the Parent Company Accounts Notice of Annual General Meeting Ten Year Review 24 25 26 27 51 52 53 59 64 Panther Securities P.L.C. Directors, Secretary and Advisers Directors * Andrew Stewart Perloff (Chairman and Chief Executive) ** Bryan Richard Galan (Non-executive) ** Peter Michael Kellner (Non-executive) John Terence Doyle (Executive) John Henry Perloff (Executive) Simon Jeffrey Peters (Finance) Company Secretary Simon Jeffrey Peters Registered Office Deneway House, 88-94 Darkes Lane, Potters Bar, Herts. EN6 1AQ Company number 293147 Website Auditors Bankers www.pantherplc.com Nexia Smith & Williamson 25 Moorgate, London, EC2R 6AY HSBC Bank PLC 31 Holborn, London EC1N 4HR Santander Corporate Banking 2 Triton Square, Regents Place, London, NW1 3AN Natwest Bank PLC Unit 40, 56 Churchill Square, Brighton, East Sussex BN1 2ES Nomad, Financial Advisers and Joint Brokers Sanlam Securities UK 10 King William Street, London, EC4N 7TW Joint Brokers Registrars Solicitors Raymond James Investment Services 77 Cornhill, London EC3V 3QQ Capita Registrars The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU Howard Kennedy LLP No. 1 London Bridge, London SE1 9BG Ross & Craig Solicitors 12A Upper Berkeley Street, London, W1H 7QE Brodies LLP 2 Blythswood Square, Glasgow G2 4AD MacRoberts LLP 152 Bath Street, Glasgow, G2 4TB Fox Williams LLP Ten Dominion Street, London EC2M 2EE Blake Morgan LLP New Kings Court, Tollgate, Chandler’s Ford, Eastleigh, Hampshire SO53 3LG * Member of Audit Committee ** Member of the Audit Committee and Remuneration Committee Panther Securities P.L.C. 2 Chairman’s Statement I am pleased to report our results for the year ended property and swap valuations resulting from the low 31 December 2014, which are the Groups 81st interest rates is fortunately still positive this year. accounts since first listed in 1934. Rents Our profits before tax for this period amounted to Our rents receivable for the year ended 31 December £4,210,000 compared to £8,241,000 for the previous 2014 amount to £12,512,000 compared to year which ended 31 December 2013 (both excluding £12,502,000 for the year ended 31 December 2013. discontinuing operations.) Once again these figures are heavily influenced by non-cash flow items. Our cost of sales amounted to £4,000,000 an increase The swaps liability reversed the improvement shown in being due to the costs arising in connection with the December 2013 with a vengeance increasing by former Wimbledon Studios Limited on our freehold £9,813,000 (shown in our consolidated income property which it used to occupy and which the Group statement) resulting in a total liability at 31 December owns; I will provide fuller details later in this statement. of £1,149,000, on prior year, virtually all of this increase 2014 of £24,475,000. Acquisitions Of course this is caused by the artificially induced and Park Road, Peterborough unprecedented low interest-rates but this low interest This freehold department store situated in the very environment does have the effect of also improving centre of this growing town contains about 150,000 property values. Sq ft of space, mostly retail, which is let to Beale PLC on a profit share. The property also has about Our entire portfolio was independently revalued by GL 15/20,000 Sq ft of vacant offices which we have Hearn Chartered Surveyors and produced a valuation available to let. This property cost £2,087,000 (including surplus of £13,110,000 whereas the director’s valuation purchase costs) and was purchased in March 2014. last year only produced a surplus of £742,000. The reason for this is not that the directors’ valuation was Maynard Road, Canterbury too cautious or the independent valuer’s optimistic but, In September 2014 we purchased the long leasehold in my opinion, just reflects the property ‘Boom’ values (100 years at a peppercorn) interest in a 26,000 Sq ft in London and closely surrounding areas which has single storey retail warehouse on Maynard Road slowly rippled outwards towards other parts of the industrial estate, subject to a 15 year leaseback country where much of our portfolio is situated. I believe (5 yearly rent reviews) to Nasons, a long established and this will continue even though central London values well-known local retailer. Our total cost was £963,000 may be faltering. (including purchase costs) and the rent is £110,000 pa. Regarding the valuation, some of the increase related to Queen Street, Mansfield our sites that have residential development value and As previously reported, we have contracted to complete thus saw larger than average increases on these. the purchase of this department store in July 2015 at a However, a big factor and nearly a third of this increase price of £2,000,000 to £2,250,000 (depending on was due to the letting achieved at the former conditions). This property, which is mainly freehold but Wimbledon Studios. The net effect of the combined also part long leasehold, is effectively two properties 3 Panther Securities P.L.C. Chairman’s Statement continued totalling over 180,000 Sq ft. The freehold directly fronts developers or may carry out one or two office to onto the main pedestrianised shopping street and the residential conversions ourselves in order to let the flats long leasehold part is inside the town’s principal and retain the resultant investment. shopping centre, with an entrance facing our store. The buildings are connected by two covered shopping 1a-6a Bruce Grove, Wickford bridges at the first floor levels. Part of the freehold is occupied by the Co-op Bank at a rental of £30,000 pa which will accrue to us after completion. Disposal In 2013 we were refused planning consent for a residential development of these outdated factory units. We challenged the grounds for the opposition which we felt were unfounded. We are delighted that our appeal was successful and we now have planning consent for In October 2014 we sold 61 Central Avenue, West 49 houses, subject to negotiation of the S.106 Molesey for £1,209,000 which was a loss on book agreement. We own two-thirds of the development site value of £57,000. The property had been vacant for with the remaining third owned by two other parties. We some time and required considerable expenditure to anticipate selling this site to a third party developer in bring back into use, and thus was a useful sale. due course. Development Progress Holloway Head, Birmingham Demolition of the majority of the buildings on this site is underway and negotiations are in hand to rent the site for parking use as a temporary expedient until full planning can be obtained for a major residential development. New planning proposals are in hand and all the numerous reports required to submit a full application are well underway. This site previously had outline planning permission for approximately 500,000 Sq ft of mixed use, but now is likely to be mainly residential comprising of about 400 flat units. Victoria Street, Wolverhampton This site now has planning permission for 8,000 Sq ft of Old Inn House, 2 Carshalton Road, Sutton We are also delighted to report that under the permitted development rules we have received consent to convert the mostly vacant four floors of offices to 28 flats in this prosperous London commuter suburb. Our well performing retail parade on the ground floor of this building will be unaffected and is fully let. Templegate House, High Street, Orpington We have also received consent under permitted development regulations to convert the three floors of offices into 21 flats. Again our parade of five shops on the ground floor will be unaffected. retail space (which could be split) with three upper floors 8-12 High Street, Broadstairs consisting of 44 units of self-contained student In early 2014 our planning consent on this site expired. accommodation. The site has been cleared and may We have been successful in obtaining a new 3 year be let as temporary parking until a user for either the consent to demolish these three buildings and replace shopping element or student housing area secures a them with a new development of 4,000 Sq ft of retail pre-let when development can commence. space, with 12 flats above in this desirable coastal A number of our other properties have secured space, with some applicants having a national permission for a change of use, from offices or factories covenant. A pre-let to a strong covenant will underwrite to residential units and we will either sell to residential the building of the whole development. Our former town. We are receiving increased interest on this retail Panther Securities P.L.C. 4 planning permission was not implemented due to the In November 2013, at a Panther Board meeting, the previous downturn in the market. majority of the Board decided they did not wish to Wimbledon Studios, 1 Deer Park Road, London We issued an announcement on 13 August 2014 and reprinted the complete announcement in my interim report of 25 September 2014. Thus I will not repeat that information but merely update you on current progress. On 5 November 2014 we completed the letting of the former Wimbledon Studios Limited premises at Deer Park Road, SW19 to Marjan Television Network Limited (“Marjan”) on a 15 year Full Repairing and Insuring Lease at £1,050,000 pa; the lease contains 5 yearly reviews and coterminous break clauses. We contracted to carry out major repairs by recovering the roof, contributing to the upgrade in electricity supply and clearing out certain internal structures to produce part of the building as a clean shell prior to Marjan taking occupation. The costs, of course, were more than we anticipated at £874,000 during the year and we may have a further smaller related cost to be charged in 2015. We negotiated to receive two and a half years’ rent in advance on completion of the lease so that the works were self-funding. continue funding Wimbledon Studios Limited and wanted to put it into immediate liquidation and either sell or relet the property. I took the view that the best deal we would get would be to continue allowing the studio to run (albeit on a restricted budget) whilst it was marketed as a going concern business and also offering the availability of the freeholds, thus giving a potential buyer more options. The one drawback to this was that Wimbledon Studios Limited had a large cash flow deficit which Panther’s Board was not prepared to fund. I therefore offered to provide, through my private company, a £50,000 loan per month to Wimbledon Studios to a maximum of £250,000 at a market interest rate rolled up until repayment. There was also an agreement and understanding with Panther that should a profitable sale or transaction take place that substantially benefitted Panther, my loan would be repaid as a priority fee. Well the funds provided made it possible for the business and property to be fully marketed over the following nine months, allowing Panther to maximise the number of competitive offers in many combinations such as, for the business plus freehold or just the freehold for redevelopment and finally a rental offer from Marjan. Our Board unanimously took the view that the The tenants are now in occupation having spent well in rental offer was best for Panther and of course were excess of £2.5 million on further improvements. As well very pleased with this transaction. The independent as an attractive letting, this 4.25 acre freehold site with revaluation more than justified that decision and the approaching 200,000 Sq ft of usable filming/TV/studio Board agreed to pay £250,000 as a fee to my private space situated in a desirable part of London has company for its support of the deal. Neither I nor my considerable growth prospects, which was another private company accrued any money out of the reason its valuation increased by over £4 million when receivership of Wimbledon Studios Limited. revalued by GL Hearn. Tenant Activity My private company was paid £250,000 in connection During the accounting year, excluding acquisitions and with this transaction which can be explained, as follows: disposals, we lost a total of 49 tenants who produced 5 Panther Securities P.L.C. Chairman’s Statement continued approximately £1,762,514 pa net. During the same While the shares have been an abysmal failure, in fact a period we gained 103 tenants at rents totalling significant loss, having this relationship gave us the £2,360,065 pa net, yielding a net gain of £597,551 pa, opportunity of purchasing some of the freehold stores before allowing for tenant incentives, etc. they occupy at depressed prices due to the property recession, the tenant favourable leases in place Notable activity in this period includes the loss of our previously granted to Beale PLC and because of their Wimbledon Studios tenant at £490,000 pa, and it’s re- loss making department store covenant. Approximately letting at £1,050,000 pa, and the loss of our tenant of two years ago, my private company purchased the The Lyceum building in Liverpool at £498,000 per majority of the preference shares of Beale PLC and an annum, where we may inherit a sub-tenancy with the outstanding loan from the Co-Op, who was a keen Cooperative Bank showing an income of £110,000 pa. seller. These, because of their perceived and genuine high risk, were purchased at a discount to face value. Political Donations Whilst it may be too late for the election this year I still The representative for Panther and my combined believe it is important to support a political party that interests on Beale PLC’s Board was Simon Peters, who stands for what I and a lot of other people believe in. was summarily dismissed by the Beales PLC Board on Thus I have once again asked for a resolution to be put 22 July 2014. before the shareholders at the forthcoming AGM to donate £25,000 to the UK Independence Party. I am In November 2014 the Board approached us to discuss sure I do not need to remind you that, although I am “possible ways forward” for the benefit of all entitled to, I and family interests do not vote on this “stakeholders” in Beale PLC which was expecting a resolution. Dividends cash crunch sometime this year. Their proposals were neither beneficial nor acceptable A 3p interim dividend was paid on 27 November 2014 to us so we put forward our own proposals which and as expected we are proposing a final dividend of culminated in a cash offer from a newly set up private 9p per share which will be payable on 31 July 2015 to company (owned by my family interests) for the entire those shareholders on the register on 19 June 2015. share of capital of Beale PLC, which was We are again offering shareholders an alternative of a recommended by the Beales Board, its expensive scrip dividend of equivalent value. financial advisers and also Nigel Beale, the Honorary President of the Company, great-grandson of the Post Balance Sheet Events founder and also a Trustee of the Beales Pension Fund. Shareholders will be aware for some years that the The offer price was approximately half the market price Group and I personally have been shareholders in Beale for the reasons as set out in the offer document. The PLC. The majority of our shares were acquired in better offer went unconditional after the first closing date and retail trading times. Over recent years the Panther now my new private company has over 80% ownership Group has acquired 10 of their freehold department and Beale PLC has been taken off the stock market; stores, with one further large store purchase due to thus saving a considerable amount in future listing complete later this year. costs. Panther Securities P.L.C. 6 Now that the situation has changed at Beale PLC, I can guarantee we will have a more harmonious landlord and tenant relationship, which in due course should benefit the value of our freehold stores. Prospects Last year I said there was a feeling of optimism in the property market and this continues, initially shown by the independent valuation but I am hoping some of this will be crystalized into realised profits and increased letting activity, resulting in increased rental income and therefore stronger profitability. Finally, I wish to thank our small but dedicated teams of staff, financial advisers, legal advisers, agents and accountants for all their hard work during the past year which has again been busier and more intensive than usual and, of course, our tenants, most of whom pay their rents and excessive and unfair business rates despite a difficult trading environment. Andrew S Perloff Chairman 28 April 2015 7 Panther Securities P.L.C. Chairman’s Ramblings “NO MORE BOOM & BUSTS” the buffet once but you could take as much as you Some time in last January, if you had happened to go could pile onto the plate. for an early breakfast in your local café, you may have noticed many of the early diners frantically thumbing Malcolm, my ex business partner, who was three years through their Sun newspaper looking for what wasn’t older than me and therefore far more sophisticated in there. The Page 3 Girl was missing, gone AWOL and culinary matters introduced me to this glutton’s delight. even worse it was reported that this daily fillip would not Under his tutelage I learned how to pile the heavy food be returning. round the edge of the plate and build a 9” pyramid of different density foods that was balanced and held There was much jubilation from various ‘wimmin’s’ together until you got back to the table. focus groups. Some said it had been demeaning to women, some had said it objectified women and others This restaurant was always busy and it was usually believed it should be banned altogether. These self- difficult to find a table. On such an occasion, we appointed guardians/spokesmen – sorry spokespeople managed to find two places side by side at a four seater – of women in some way wanted to curtail or abolish table – the other occupants left soon after we sat down the freedom of these girls to earn a living. – perhaps they found our huge towers of precariously piled food off putting. I was about half way through my It may not surprise you to know that I have my own perfectly balanced stack of food when two young limited experience in these matters, which I am naturally women approached our table and asked us if the spare pleased to share with you. places were free. With great alacrity we both agreed that the seats were indeed free and after putting their As many of my shareholders will know, in 1962 aged plates on the table, they turned round to take off their 17, I started working as the office boy in a Mayfair coats to hang on the coat rail behind them. estate agent’s office. In addition to my weekly wage of £5, I received a daily 3/- (15p) luncheon voucher which My friend and I were delighted with this unexpected was enough to buy a three course meal in many of the stroke of luck. They were both pretty, one much taller local cafés in the side streets of Mayfair. than the other but when they turned round! “WOW!” The tall one facing me was very slim, wearing a thin After a year, my salary had risen to £8 per week and jersey dress which clung to her slim body and with her although the luncheon vouchers remained at 3/- tight belt, it emphasised her DD sized bosom. If Page 3 fortunately I would, from time to time, receive a share of had been invented then, she could have filled it my boss’s commission. On these auspicious occasions, admirably, possibly Page 2 as well. I would arrange to meet a friend to really push the boat out on a superior lunch that cost as much as 5/- (25p). I immediately dropped my knife and fork, my face flushed and I was temporarily dumbstruck, my appetite One of these superior restaurants was The Salad Bowl vanished and finding my face 2’6” away from this vision which was situated on the first floor above a large shop of delight, I sat motionless for two or three minutes in Oxford Street. Their format was simple; you paid 5/-, before I rediscovered my normal witty conversation “can took a (slightly smaller than normal) dinner plate and I pass you the salt?” and “do you work near here?” We served yourself from the long buffet containing a huge all had such a pleasant conversation for the next half variety of delicious foods. You were only allowed to visit hour that I lost track of time and was met with frosty Panther Securities P.L.C. 8 glares when I returned to the office 20 minutes late. almost exclusively for glamour shots and consequently Over the next week, my friend and I went back daily to Panther House regularly had Page 3 Girls coming to this expensive restaurant but we never saw this reception asking for his studio and needed to be Aphrodite of the Salad Bowl again. escorted through the labyrinth of corridors. This was not an unpleasant duty. As you know, my Ramblings find it easy to jump through time, so now we must fast forward twenty years and I One of Harry’s main clients was the Daily Star and find myself in the 1980’s older and wiser. I had been occasionally they had a small photographic session married, had two children then divorced. I had been party (in full bikinis) for Star Prize Winners, who had financially successful then lost the lot in the mid- chosen their Top Star Birds and correctly answered a seventies property crash but I was now thankfully back quiz. Malcolm and I were often asked to these parties, on the way up again and able to afford a long haul where I met quite a few Page 3 Girls. I found all were holiday. happy in their work and saw it as a lucrative stepping stone, hopefully to a career in acting, singing, TV etc. This took me to Thailand with a few single friends where Their backgrounds were diverse; some were streetwise I enjoyed lazing on a sunbed beside the pool and girls with little education, whilst others had been watching what little activity was going on around me. I privately educated and were well-spoken and polished. then noticed an attractive young bikini clad woman in the adjoining garden area who was leaning awkwardly One day one of the most popular Page 3 girls of her against a palm tree. She was constantly moving to day came to the studio and after she left, Harry told me different positions round the tree and as I assumed she how he had made a huge mistake when he turned her was trying to attract my attention, I went to investigate. down as a potential model over a year earlier and When I got up close I realised she was in the middle of missed the chance of becoming her photographic a photographic shoot, the photographer and all the manager. He explained that on her photo shoot with masses of equipment had been hidden from my him she had not smiled and thus looked like a normal, investigations by a bush. slightly chubby naked woman. When she smiled Being nosy, I asked what magazine they were working transformed her from that fairly ordinary girl into a for and consequently became quite friendly with the beauty, thus showing that the appeal is not just the lack however she had the most glorious smile which totally photographer. Harry was a successful sports of clothing. photographer from Liverpool, who in recent years had diversified into “glamour photography”. With his With the benefit of hindsight, it was clear that this was expanded interests he told me that he really needed a the beginning of the celebrity era which a lot of these studio in Central London. models became. Many of these girls became very high earners; some of the most popular ones commanding The basement at Panther House had available units up to £5,000 just to open a new store or supermarket. ideal for his purposes; high ceilings, a clear space of 1500 Sq ft, no natural lighting and in good condition. The anti-Page 3 Girl’s focus groups would have He came to see the unit and took it immediately paying restricted their freedom to earn a good living. These over twice the previous rent which had been charged models, like footballers, mostly have only a limited for storage purposes. For the next ten years he used it window of opportunity for high earning and in my 9 Panther Securities P.L.C. Chairman’s Ramblings continued opinion there is only one person who gave these possessions they are called robbers and if caught, are women true liberation and that was Margaret Thatcher usually severely punished with long prison sentences. and her various chosen Chancellors. Firstly, she proved a woman can get the country’s top established family business smash the windows and job and more importantly, Sir Geoffrey Howe in his first take whatever goods they choose and then run away, Budget in 1980 reduced the top rate of income tax from having devastated the building, this is called a riot and 83% to 60%. This was the beginning of a form of if anyone is caught, they usually receive some form of If a very large group of people storm into your long freedom for those who wanted to work hard and earn incarceration. their way in the world. It was nearly 10 years later Nigel Lawson reduced the top income tax rates from 60% to However, if many thousands of people peacefully 40% creating even more incentive to work your way to choose a very small gang of people to make rules that success. Just as important this Budget announced allow these types of heists to take place it is called separate taxation for husbands and wives. Democracy and the theft is called Taxation. Of the thousands of these young girls who were The small gang of people who have to be chosen by blessed with good looks and figures which allowed the masses are called Politicians. To make it easier to be them to escape the typing pool or shop counter, many a “chosen one” Politicians divide themselves into became high earners and are now probably middle different feral groups. Each group chooses a section of class grandmothers, mothers and wives living very the masses they believe are easiest to bribe with gifts of comfortable lives with their families in valuable suburban benefits, money (that is not theirs) or promises to properties they own, paid for out of earnings that a protect the country or the environment or rights over more moderate tax system allowed them to achieve. others such as employers. They are probably still models but of suburban respectability. Nearly all Politicians have similarities; they are persuasive speakers, they have a mastery of avoiding LIES, DAMNED LIES, POLITICIANS AND any questions they do not wish to answer, they excel at TAXATION looking after their personal interests but their foremost If someone threatens you and takes your money whilst interest however is in gaining or retaining power. you are out shopping, they are called a mugger. If caught, they are taken before a magistrates court, They also nurture relationships with the rich and punished with a small fine and a threat of more severe successful and leaders of big organisations to obtain punishment if caught doing it again. funds to promote their own brand of munificence for the If someone breaks into your home and steals your apply to them or they will be far less punishing than their masses, assuring donors that their kleptocracy will not money he is called a burglar and treated similarly opponents. leniently. If the burglar is caught a number of times he is more severely punished and maybe sent to prison. Nearly all the problems of current times are caused by If three or four people break into your home whilst you freedoms. The costs of the trough their snouts feed are there, threaten you with weapons and take your from is infinitesimal in comparison to the incredible these Kleptocrats buying votes and restricting Panther Securities P.L.C. 10 wastefulness that is created by the very bureaucracy The Chinese have a curse “May you live in exciting that has to be established to confiscate money from times”. each person to be handed out to someone deemed by them to be more needy. Yours despairingly, The top 2% of our working population – roughly around Andrew S Perloff 600,000 people – are believed to pay nearly 50% of Chairman income tax etc. These people put far more into the community pot than they ever take out of it. 28 April 2015 I have said it before and consider it worth repeating that there are about 4.5 million ex-patriots who have left the UK over the last 10-20 years of which a very meaningful percentage must have been in the 2% upper income tier bracket who left this country due to unfair tax policies. What I find appalling is that politicians are perfectly aware of this fact but they also know that if they threaten high taxes on only the top 2% and promise that this will produce more goodies to the bottom 98%, they MUST receive more votes from the majority that they have misled. Of course most people will eventually be worse off when many of these unfairly taxed taxpayers decide this type of theft can be avoided by simply leaving to more friendly shores or simply reducing their own endeavours. Tax receipts go down, jobs are lost, benefits become frozen and giveaway goodies get less and less. The population majority will then have to pick up the tab for all the extra bureaucracy created. We should not be frightening the country’s best customers away. We should be encouraging them to return to the fold. However, common sense and truth are almost impossible to get at election time. 11 Panther Securities P.L.C. Group Strategic Report About the Group Panther Securities PLC is a property investment company listed on the Alternative Investment 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 owns and manages over 800 individual property units within approximately 130 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 many residential flats in several town centre locations. Key Ratios and measures Gross Profit Margin (Gross profit/turnover) Gearing (debt*/(debt* + equity)) Interest Cover** Finance cost rate (finance costs/average borrowings for the year) Yield (rents investment properties/average market value investment properties) Net assets value per share Earnings per share – continuing Dividend per share Investment property acquisitions Investment property disposal proceeds 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, 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 maintained. 2014 68% 50% 2013 77% 51% 2012 69% 53% 2011 65% 47% 1.17 times 1.38 times 1.25 times 1.97 times 6.6% 6.7% 6.9% 5.7% 7.5% 409p 26.1p 12.0p £3.2m £1.2m 7.9% 395p 42.0p 12.0p £5.3m £2.2m 7.4% 367p (17.2)p 12.0p £11.4m £0.6m 6.7% 397p (5.1)p 12.0p £21.0m — * Debt in short and long term loans, excluding any liability on financial derivatives ** Profit before taxation excluding interest, less movement on investment properties and on financial instruments and impairments, divided by interest Business Review The overall rent receivable is consistent with the prior year and the bad debt charge as a percentage of rents has improved to 5.8% compared to 6.7% in the prior year (after stripping out the rent and provision for Wimbledon Studios Limited which is now in administration). The Group has seen a strong improvement in the property market with our own portfolio showing a £13.1 million uplift following an independent valuation by GL Hearn. The Board is still only investing in special situations (as with the prior year) and this year made its lowest level of investment in property since 2009. Panther Securities P.L.C. 12 As stated in our 2013 financial statements, the reduction in investment is partly due to the Board seeing fewer investment opportunities in a stronger market, while also being very selective due to our remaining loan facilities. Over the next few years, we expect it will be a good time to dispose of investments and hopefully realise profits on properties that were mainly purchased in worse times. The letting of Wimbledon Studios has had a significant impact on these financial statements and the Group. In particular we received £2,625,000, being two and a half years’ rent in advance, although we only recognise the element that relates to the rent for the year being is £175,000. As income statement such our comparable to the prior year but our cash generation was very strong, being £1,900,000 higher than last year. The costs of sales were much higher, but again a large element relating to the Wimbledon Studios letting, we spent £874,000 on repairs in order to secure this significant this was a large roof resurfacing repair, as well as having additional legal fees of £250,000. These costs will not be repeated going forward but reduce this year’s gross profit. letting, much of Finally regarding this letting, a third of our property revaluation increase was as a result of this letting at Wimbledon Studios. We anticipate, as the economy continues to maintain its upward momentum, leading to further increases in underlying property values, this will provide us with the opportunity to dispose of some of our sites, especially non-income producing ones. In particular we hope there will be further upside on some of our sites that are suitable for residential redevelopments. Financing The Group entered into facilities in July 2011 of £75.0 million with HSBC and Santander under a club loan facility. We drew down a further £1.2 million (2013 – £2.8 million) in the year and repaid £1.0 million loan amortisation in July 2014 (this was an agreed reduction from £3 million to £1 million for both July 2014 and July 2015). At 31 December 2014 the Group had £1.5 million of this facility available and £5.3 million cash for future investment and trading activities. Given the right opportunities we would look to fund future investment with additional finance and further disposals, while also continuing the scrip dividend, which kept circa £1m of cash in the Group in both 2013 and 2014. The Group will begin discussions this year with regard to replacing or extending our existing loan facilities which expire in July 2016. our total derivative financial liability on our Consolidated Statement of Financial Position is £24.5 million (2013: £14.7 million). We are disappointed with this increase in this liability but trust that when long-term interest rates normalise this liability should reduce significantly. These financial instruments (shown in note 29) are our interest rate swaps that were entered into to remove the cash flow risk of interest rates increasing, by fixing our interest costs. However, in the uncertain economic times seen over the last four to five years there can be large swings in the accounting valuations. Small movements in the expectation of future interest rates can have a significant impact on their fair value; this is partly due to their long dated nature. These contracts were entered into in 2008 when long term interest rates were significantly higher than at the Statement of Financial Position date. In a hypothetical world if we could fix our interest at current rates and term we would have much lower interest costs. Of course we cannot undo these contracts that were entered into historically, but for accounting purposes instruments are compared to current these financial market rates, with the additional liability compared to the market shown on our Statement of Financial Position. Financial Risk Management The Company and Group operations expose it to a variety of financial risks, the main two being the effects of changes in credit risk of tenants and interest rate movement exposure on borrowings. The Company and Group have in place a risk management programme that seeks to limit the adverse effects on the financial performance of the Company and Group by monitoring 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, and these large swings are shown within the income statement. However, the actual cash outlay effect is nil when considered with the loan, as the instruments are used to protect against increases in cash outlays. Financial derivative We have seen a sizeable fair value loss in our long term liability on derivative financial instruments of £9.6 million (2013: £6.0 million fair value gain). Following this loss, 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 13 Panther Securities P.L.C. Group Strategic Report continued implemented by the Company and Group’s finance department. 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 Company and Group also have price exposure on listed equities that are held as investments. The Group has a policy of holding only a small proportion of its assets as listed investments. Credit risk The Company and Group have implemented policies that require appropriate credit checks on potential tenants before lettings are agreed. In most 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 also reduced significantly as the Group has Liquidity risk The Company and Group actively ensure liquidity by maintaining a long-term finance facility and also hold cash deposits, which are both to ensure that the Company and Group have sufficient available funds for operations and planned expansions. 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. 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). The Directors will the appropriateness of this policy annually. revisit Other non financial risks The Directors consider that the following are potentially material non financial risks. Risk Reputation Impact Action taken to mitigate Raise capital/deal flow reduced Act honourably, invest well. Regulatory changes Transactional and holding costs Seek high returns to cover additional costs. increase Lobby Government. People related issues Loss of key employees/low morale/inadequate skills Maintain market level remuneration packages, flexible working and training. Strong succession planning and recruitment. Computer failure Loss of data, debtor history External IT consultants, backups, offsite copies. Asset management Wrong asset mix, asset illiquidity Draw on wealth of experience to ensure balance between income producing and development opportunities. Continue spread of tenancies and geographical location. This report was approved and authorised for issue by the Board and signed on its behalf by: S. J. Peters Company Secretary Dated: 28 April 2015 Panther Securities P.L.C. 14 Deneway House 88-94 Darkes Lane Potters Bar Hertfordshire EN6 1AQ Directors’ Report Company number 293147 The Directors submit their report together with the audited financial statements of the Company and of the Group for the year ended 31 December 2014. Directors’ Responsibilities Statement The directors are responsible for preparing the Strategic the Directors’ Report and the financial Report, statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the Group financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to: l select suitable accounting policies and then apply them consistently; l make judgments and accounting estimates that are reasonable and prudent; l state whether applicable IFRSs as adopted by the European Union have been followed subject to any material departures disclosed and explained in the Group financial statements; and l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement and Group Strategic Report. The financial position of the Group, including key financial ratios is set out in the Group Strategic Report. In addition, the Report of the Directors includes the Group’s objectives, policies and processes for managing its capital; the Group Strategic Report includes details of its financial risk management objectives; and the notes to the accounts provide details of its financial instruments and hedging activities, and its exposures to credit risk and liquidity risk. The Group is strongly capitalised, has reasonable 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 Group has a long term loan in place and excellent relations with its lenders. 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. Principal activities, review of business and future developments The principal activity of investment and dealing in property and securities. the Group consists of The review of activities during the year and future developments is contained in the Chairman’s Statement and Group Strategic Report. Company’s objectives and management of capital Our primary objective is to maximise long-term return for our shareholders by stable growth in net asset value 15 Panther Securities P.L.C. Directors’ Report continued and dividend per share, sustainable rental income stream. from a consistent and The Company’s principal capital base includes share capital and retained reserves, which is prudently invested to achieve the above objective and is supplemented with medium to long-term bank finance. Results and dividends The profit for the year after taxation, amounted to £4,692,000 (2013: £7,073,000). The interim dividend of £525,000 (3.0p per share) on ordinary shares was paid on 27 November 2014. The Directors recommend a final dividend of £1,574,000 (9.0p per share) 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 total dividend for the year ended 31 December 2015 being anticipated at 12p. As in the previous year the shareholders will have the option of a scrip dividend for the 2015 final dividend of 9p per share, with the default option being cash. Directors and their beneficial interests in shares of the Company The Directors who served during the year and their beneficial interests in the Company’s issued share capital were: Ordinary shares of £0.25 each 2013 2014 A. S. Perloff (Chairman) B. R. Galan (Non – executive) P. M. Kellner (Non – executive) J. T. Doyle J. H. Perloff S. J. Peters 4,241,783 4,212,687 315,502 17,000 61,815 107,500 178,557 323,902 22,000 63,460 107,500 183,143 A. S. Perloff and his family trusts have beneficial interests in shares owned by Portnard Limited, a Company under their control, amounting to 8,183,662 (2013 – 7,971,406). have been There shareholdings since 31 December 2014. changes no in Directors’ interest No beneficial is attached to any shares registered in the names of Directors in the Company’s subsidiaries. No right has been granted by the Company to subscribe for shares in or debentures of the Company. Directors’ emoluments Directors’ emoluments of £288,000, (2013 – £250,000) are made up as follows: Director Executive A. S. Perloff J. T. Doyle J. H. Perloff S. J. Peters Non-executive B. R. Galan P. M. Kellner Salary/Fees £’000 Bonus £’000 Taxable Pension Benefit Contribution £’000 £’000 — 73 46 43 10 10 182 — 28 6 28 — — 62 5 2 1 — — — 8 — — — 36 — — 36 Total 2014 £’000 5 103 53 107 10 10 288 Total 2013 £’000 6 87 50 87 10 10 250 Panther Securities P.L.C. 16 Pension and other benefits A. S. Perloff is the sole member and beneficiary of a non-contributory Director’s pension scheme. The Group ceased contributions in 1997 and accordingly made no contributions to the pension fund in 2014 and does not anticipate making further contributions. S. J. Peters had pension contributions paid in the year by the Company of £36,000 (2013 – £36,000) into his personal stakeholders’ contribution pension scheme. No other payments were paid in respect of any other Director during the year (2013 – £nil). Third party indemnity provision for Directors Qualifying third party indemnity provision for the benefit of six directors was in force during the financial year and as at the date this report was approved. Capital structure Details of the issued share capital of the Company are shown in note 25. The Company has one class of ordinary shares which carries no right to fixed income. Each share carries the right to one vote at general meetings of the Company. The details of the Group’s treasury policy are shown in note 30. Financial risk management Information regarding the use of financial instruments and the approach to financial risk management is detailed in the Strategic Report. Donations During the year the Group made £17,500 political donations (2013 – £nil). The Group makes donations to charities through advertisements at charity events and in the diaries of charities, the total of which in 2014 was £3,000 (2013 – £3,000). The Group is a Foundation Partner of the preferred charity of the property industry, Land Aid, donating £10,000 (2013 – £10,000) and in 2013 also made a specific donation of £15,000 to the Red Cross Typhoon appeal. Post balance sheet events After the Group sold its entire the year-end, shareholding in Beales PLC to English Rose Enterprises Limited a Company wholly owned by Portnard Limited (Panther’s largest shareholder). Simon Peters and Andrew Perloff are directors of English Rose Enterprises Limited. The Group sold its holding to this company for 6p a share in February 2015. The offer had been made to all shareholders in Beales PLC and accepted by over 75% of them. This disposal will crystallise a further £244,000 loss in our accounts for 2015, but will also realise approximately £244,000 of cash. Auditors In the case of each person who was a Director at the time this report was approved: l so far as that Director was aware there was no relevant available information of which the Company’s auditors were unaware; and l that Director had taken all steps that the Director ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s auditors were aware of that information. This information is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006. A resolution to re-appoint the auditors, Nexia Smith & Williamson, will be proposed at the next Annual General Meeting. This report was approved and authorised for issue by the Board and signed on its behalf by: S. J. Peters Company Secretary Dated: 28 April 2015 Deneway House 88-94 Darkes Lane Potters Bar Hertfordshire EN6 1AQ Status Panther Securities P.L.C. is a Company listed on the Alternative and is incorporated in United Kingdom. Investment Market (“AIM”) 17 Panther Securities P.L.C. Corporate Governance it did not Panther Securities P.L.C. Board recognise the importance of sound Corporate Governance. However fully comply with the UK during 2014, Corporate Governance Code, issued by the Financial Conduct Authority, as in the Board’s view it would have been too onerous. Nevertheless, the Company has regard for the main provisions as far as is practicable and appropriate for a public company of its size. The Board The Board currently consists of six Directors, of whom two are non-executives. It meets regularly during each year to review appropriate strategic, operational and financial matters and otherwise as required. In the year the Board met three times with all members present. It supervises the executive management and a schedule of items reserved for the full Board’s approval is in place. Panther Securities P.L.C. has an Executive Chairman who is also the Chief Executive. of The Board considers the two non-executive Directors to be independent and to represent the interests of shareholders. Both non-executive Directors are of the highest calibre. Each is independently minded with a breadth and relevant successful business experience. They are entitled to the same information as the Executive Directors and are an integral part of the team, making a most valuable contribution. Both non-executive Directors have a sufficient level of expertise to challenge and hold the executive Directors to account. Each Board member has responsibility to ensure that the Group’s strategies lead to increased shareholder value. Biographical details of Executive Directors:- Andrew Perloff (Chairman) He has over 50 years’ experience in the property sector, including almost 40 years’ experience of being a Director of a Public Listed Company mainly as Panther’s Chairman. He has significant experience of corporate activity including several contested take-over bids and has also served on the Board of Directors of 6 other public listed companies. Simon Peters (Finance Director) He is a member of the Chartered Institute of Taxation and a Fellow of the Chartered Certified Accountants and was formerly with KPMG LLP and the Lombard Bank Finance Department and also a non-executive director of Beale PLC. He joined Panther in 2004 and was appointed Finance Director in 2005. John Doyle (Executive) He is a member of the Royal Institution of Chartered Surveyors and was previously with London Electricity plc and Chesterton International plc, having worked in the property sector since 1989, he joined Panther in January 2001. His areas of responsibility include property acquisition and disposal, asset management and development. He was appointed Executive Director in 2005. John Perloff (Executive) Previously with a commercial West End agent specialising in retail acquisitions and disposals, he joined Panther in 1994. His areas of responsibility include property lettings and acquisitions. He was appointed Executive Director in 2005. Biographical details of Non-executive Directors:- Bryan Galan (Non-executive) Chairman of the Remuneration Committee. He is a Fellow of the Royal Institution of Chartered Surveyors. He was joint Managing Director of Amalgamated Investment and Property Co. Limited and was previously a Non-executive Director of Rugby Estates Investment Trust Plc. formerly Peter Kellner (Non-executive) Chairman of the Audit and Nomination Committees. He is an Associate of the Chartered Institute of Bankers and of the Institute of Taxation. He was formerly joint General Manager of the U.K. banking operations of Credit Lyonnais Bank Nederland NV. Communication with shareholders The Company provides extensive information about the Group’s activities in the Annual Report and Financial Statements and the Interim Report, copies of which are sent to shareholders. Additional copies are available by application. The Group is active in communicating with both its institutional and private shareholders and welcomes queries on matters relating to shareholdings and the business of the Group. All shareholders are encouraged to attend the Annual General Meeting, at which Directors and senior management are introduced and are available for questions. The Company provides a website with up to date information, including announcements and company accounts. Panther Securities P.L.C. 18 Audit Committee The Audit Committee has three members including both non-executive Directors and an executive Director (being Andrew Perloff) and it is chaired by Peter Kellner. Its terms of reference, which are available from the Company’s registered office, are that it meets at least twice a year to review the Group’s accounting policies, financial and other reporting procedures, with the external auditors in attendance when appropriate. In 2014 the committee met three times with all members present. The internal controls are reviewed annually ensuring their effectiveness and any specific issues are dealt with if and when they arise. When the Board reviews internal controls they consider the effectiveness of controls, concentrating on all material controls, including operational and compliance controls, and risk management systems. Remuneration Committee The Remuneration Committee consists solely of the two non-executive Directors, Bryan Galan (Chairman) and Peter Kellner. It reviews the terms and conditions of service of the Chairman and Executive Directors, ensuring that salaries and benefits satisfy performance and other criteria. When setting remuneration the Committee consults with the Chairman of the Board and no external third parties are consulted. In 2014 the Committee met three times with all members present. Remuneration policy Company policy is to reward fairly the Executive Directors sufficiently to retain and motivate these key individuals. In determining remuneration, consideration is given to their role, their performance, reward levels throughout the organisation, as well as the external employment market. The Remuneration Committee considers that currently the Executive Directors’ remuneration is below market comparable. The only element of specific performance is the bonuses, however this is adjusted to reflect market conditions and company results. remuneration that reflects 19 Panther Securities P.L.C. Independent Auditors’ Report Independent Auditor’s Report to the Members of Panther Securities P.L.C. We have audited the financial statements of Panther Securities P.L.C. for the year ended 31 December 2014 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Parent Company Balance Sheet, the Parent Company Cash Flow Statement and related notes 1 to 49. The financial reporting framework that has been applied in the preparation of the Consolidated Financial Statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Parent Company accounts is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of www.frc.org.uk/auditscopeukprivate. the scope of an audit of financial statements is provided on the FRC’s website at Opinion on financial statements In our opinion: (cid:1) (cid:1) (cid:1) (cid:1) the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2014 and of the Group’s profit for the year then ended; the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the Parent Company accounts have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Panther Securities P.L.C. 20 Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: (cid:1) (cid:1) (cid:1) (cid:1) adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or the Parent Company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Stephen Drew Senior Statutory Auditor, for and on behalf of Nexia Smith & Williamson Statutory Auditor Chartered Accountants 25 Moorgate London EC2R 6AY 28 April 2015 21 Panther Securities P.L.C. Consolidated Income Statement For the year ended 31 December 2014 Revenue Cost of sales Gross profit Other income Administrative expenses (Loss)/profit on disposal of investment properties Movement in fair value of investment properties Share of trading loss from associate undertaking Finance costs Investment income Loss on disposal of plant and equipment Reversal of impairment/(impairment) of available for sale investments (shares) Fair value (loss)/gain on derivative financial liabilities Profit before income tax Income tax credit/(expense) Profit for the year from continuing operations Profit/(loss) for the year from discontinuing operations Profit for the year Attributable to: Equity holders of the parent Non-controlling interest Profit for the year Discontinuing operations attributable to: Equity holders of the parent Non-controlling interest Profit/(loss) for the year Earnings/(loss) per share Basic and diluted – continuing operations Basic and diluted – discontinuing operations Notes 5 5 16 18 10 9 20 30 11 14 14 31 December 2014 £’000 31 December 2013 £’000 12,512 (4,000) 8,512 291 (2,602) 6,201 (57) 13,110 19,254 — (5,263) 21 (22) 33 (9,813) 4,210 315 4,525 167 4,692 4,525 — 4,525 125 42 167 26.1p 0.7p 12,502 (2,851) 9,651 96 (2,744) 7,003 385 742 8,130 (208) (5,226) 24 — (522) 6,043 8,241 (1,082) 7,159 (86) 7,073 7,159 — 7,159 (65) (21) (86) 42.1p (0.4)p Panther Securities P.L.C. 22 Consolidated Statement of Comprehensive Income For the year ended 31 December 2014 Profit for the year Other comprehensive income 31 December 2014 £’000 31 December 2013 £’000 Notes 4,692 7,073 Items that may be reclassified subsequently to profit or loss Movement in fair value of available for sale investments (shares) taken to equity Deferred tax relating to movement in fair value of available for sale investments (shares) taken to equity Other comprehensive loss for the year, net of tax Total comprehensive income for the year 20 28 Attributable to: Equity holders of the parent Non-controlling interest — — — 4,692 4,650 42 4,692 (156) 36 (120) 6,953 6,974 (21) 6,953 23 Panther Securities P.L.C. Consolidated Statement of Financial Position Company number 293147 As at 31 December 2014 31 December 2014 £’000 31 December 2013 £’000 Notes ASSETS Non-current assets Plant and equipment Investment property Deferred tax asset Available for sale investments (shares) Current assets Inventories Stock properties Assets held for sale Trade and other receivables Cash and cash equivalents* Total assets EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Capital and reserves Share capital Share premium account Capital redemption reserve Retained earnings Non-controlling interest Total equity Non-current liabilities Long-term borrowings Derivative financial liability Obligations under finance leases Current liabilities Trade and other payables Short-term borrowings Liabilities held for sale Current tax payable Total liabilities Total equity and liabilities 15 16 28 20 21 19 23 25 26 26 27 30 33 29 27 19 185 173,412 1,215 1,179 175,991 — 991 535 4,433 5,335 11,294 187,285 4,372 4,692 604 61,804 71,472 82 71,554 71,058 24,475 7,038 102,571 11,681 1,140 228 111 13,160 115,731 187,285 386 158,184 720 1,083 160,373 145 1,450 — 5,271 3,858 10,724 171,097 4,297 3,750 604 59,225 67,876 40 67,916 68,760 14,662 7,021 90,443 9,326 3,170 — 242 12,738 103,181 171,097 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. Panther Securities P.L.C. 24 Consolidated Statement of Changes in Equity For the year ended 31 December 2014 Balance at 1 January 2013 Total comprehensive income Dividends Share capital £’000 4,217 — 80 Share Capital premium redemption £’000 £’000 Retained earnings £’000 Total £’000 2,886 604 54,285 61,992 — 864 — — 6,974 6,974 (2,034) (1,090) Balance at 1 January 2014 4,297 3,750 604 59,225 67,876 Total comprehensive income Dividends — 75 — 942 — — 4,650 4,650 (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). 25 Panther Securities P.L.C. Consolidated Statement of Cash Flows For the year ended 31 December 2014 Cash flows from operating activities Profit from operating activities Add: Depreciation charges for the year Add: Write off of goodwill Add: Loss on impairment of stock properties Less: Rent paid treated as interest Profit before working capital change Increase/(decrease) in receivables Increase in payables Cash generated from operations Interest paid Income tax paid Net cash generated from continuing operating activities Net cash generated from discontinuing operating activities Cash generated used in investing activities Purchase of plant and equipment Purchase of investment properties Purchase of available for sale investments (shares) Proceeds from sale of investment property Proceeds from sale of fixed assets Dividend income received Interest income received Net cash used in continuing investing activities Net cash used in discontinuing investing activities Cash generated from financing activities Repayments of loans Draw down of loan Dividends paid Net cash generated from continuing financing activities Net cash generated from discontinuing financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year* 31 December 2014 £’000 31 December 2013 £’000 6,201 95 — 259 (544) 6,011 439 2,626 9,076 (4,457) (188) 4,431 163 (82) (3,171) (63) 1,193 29 11 10 (2,073) (7) (1,149) 1,197 (1,054) (1,006) (31) 1,477 3,858 5,335 7,003 106 8 259 (544) 6,832 (924) 1,168 7,076 (4,417) (121) 2,538 153 — (5,326) — 2,175 — 15 9 (3,127) (112) (147) 2,800 (1,090) 1,563 30 1,045 2,813 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. Panther Securities P.L.C. 26 Notes to the Consolidated Accounts For the year ended 31 December 2014 1. General information Panther Securities P.L.C. (the Company) is a Public Limited Company incorporated in Great Britain. The addresses of its Registered Office and principal place of business are disclosed in the introduction to the Annual Report. The principal activities of the Company and its subsidiaries (the Group) are described in the report of the Directors. 2. New and revised International Financial Reporting Standards Standards, interpretations and amendments to published standards that are not yet effective Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group’s accounting periods beginning on or after 1 January 2015 or later periods and have not been early adopted. It is anticipated that these new standards, interpretations and amendments currently in issue at the time of preparing the financial statements (April 2015) will have a material effect on the consolidated financial statements of the Group, however the extent of this has not yet been assessed. l l IFRS 9 Financial Instruments* IFRS 15 Revenue from Contracts with Customers* * Not yet endorsed by the EU The Parent Company and subsidiaries have not adopted IFRS in their individual accounts. 3. Critical accounting judgements and key sources of estimation uncertainty In the process of applying the entity’s accounting policies, which are described below, the critical accounting judgements made by management which have had a material effect on the financial statements are as follows: Impairment of available for sale equity investments The Group follows the guidance of IAS 39 to determine when an available for sale equity investment is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost, the financial health and short-term business outlook for the investee, including factors such as industry and market sector performance, and operational and financing cash flow. Estimation uncertainty Additionally there were sources of estimation uncertainty as noted under the accounting policy for Investment Properties and fair value of Derivative Financial Instruments. 4. Significant accounting policies The financial statements have been prepared in accordance with International Financial Reporting Standards adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation. The financial statements have been prepared on the historical cost basis, except for the revaluation of Investment Properties, Derivative Financial Instruments and Available for Sale Investments which are carried at fair value. The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions which are based on management’s best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes. The principal accounting policies are set out below. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. 27 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 4. Significant accounting policies continued The results of subsidiaries disposed of are included in the consolidated income statement to the effective date of disposal, and those acquired from the date on which control is transferred to the Group. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling share of changes in equity since the date of the combination. Profits applicable to the non-controlling interest in the subsidiary’s equity are allocated against the interests of the Group. Assets and businesses held for sale Assets and businesses classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and gains or losses on subsequent re-measurements are included in the income statement. No depreciation is charged on assets and businesses classified as held for sale. Assets and businesses are classified as held for sale if their carrying amount will be recovered or settled principally through a sale transaction rather than through continuing use. The asset or business must be available for immediate sale and the sale must be highly probable within one year. MRG Systems Limited is classified as held for sale as at 31 December 2014. Investment Properties Investment properties, which are properties held to earn rentals and/or capital appreciation, are revalued annually by the Directors using the fair value model of accounting for Investment Property at the statement of financial position date. When the Directors revalue the properties they make judgements based on the covenant strength of tenants, remainder of lease term of tenancy, location, and other developments which have taken place in the form of open market lettings, rent reviews, lease renewals and planning consents. Gains or losses arising from changes in the fair value of investment property are included in the income statement in the period in which they arise. However in the current year, the properties were valued by the independent experts GL Hearn using similar procedures and methodology. In accordance with IAS 17 (‘Leases’) and IAS 40 (‘Investment Property’), a property interest held under an operating lease, which meets the definition of an investment property, is classified as an investment property. The property interest is initially accounted for as if it were a finance lease, recognising as an asset and a liability the present value of the minimum lease payments due by the group to the freeholder. Subsequently, and as described above, the fair value model of accounting for investment property is applied to these interests. A corresponding interest charge is applied to the finance lease liabilities based on the effective interest rate. Fair value measurement of investment property is classified as Level 3 in the fair value hierarchy. Using the fair value model in IAS 40 is a recurring measurement. Transfers between investment property and stock properties Transfers from stock properties to investment property are made at fair value; any difference between the fair value of the property at the date of transfer and its carrying amount is recognised in profit or loss. Panther Securities P.L.C. 28 For a transfer from investment property carried at fair value to inventories, the property’s deemed cost for subsequent accounting in accordance with IAS 2 (‘Inventories’) is its fair value at the date of change in use. Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit or loss for the period. Taxable profit or loss differs from profit or loss as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that have been substantively enacted on or before the balance sheet date. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Current tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current assets and liabilities on a net basis. Corporation tax for the period is charged at 21.50% (2013 – 23.25%), representing the best estimate of the weighted average annual corporation tax rate expected for the full financial year. Segment reporting An operating segment is a component of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. MRG Systems Limited was previously classified as separate operating segment to the activities of the rest of the Group, where MRG Systems Limited’s principal activity is that of electronic designers, engineers and consultants. In the current year the operations of MRG Systems Limited have been classified as discontinuing. Retirement benefit costs The Company operates a defined contribution pension scheme and any pension charge represents the amounts payable by the Company to the fund in respect of the year. 29 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 4. Significant accounting policies continued Revenue recognition Revenue comprises: (1) (2) (3) (4) (5) Rental income from tenancy occupied properties net of Value Added Tax where appropriate: The income is recognised on an accruals basis. Sale of stock properties: This is recognised on the date that exchange of contracts becomes unconditional. Sale of current asset investments: This is recognised on the sale becoming unconditional. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated cash receipts through the expected life of the financial assets to that asset’s net carrying amount. Dividend income from investments is recognised when the Company’s rights to receive payment have been established. Foreign currency translation Transactions in foreign currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the statement of financial position date. Any gains or losses arising on translation are taken to the income statement. Plant and equipment Fixtures, fittings and motor vehicles are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided at rates calculated to write off the cost of plant and equipment less their residual value, over their expected useful lives. The rates used across the Group are as follows: Fixtures and equipment Motor vehicles 10% – 33% 20% Straight line Straight line The gain or loss arising on the disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement. Impairment of property, plant and equipment At each statement of financial position date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the impairment loss up to value of previous revaluation is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in the income statement, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Panther Securities P.L.C. 30 Leasing All leases are operating leases. The Group as lessor Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term. The Group as lessee Rentals payable under operating leases are charged to profit or loss on a straight line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight line basis over the lease term. The accounting policy for investment properties describes the Group’s statement of financial position for investment properties held under an operating lease. Financial instruments Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Trade receivables Trade receivables are initially recognised at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits. Financial liabilities and equity Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. Trade payables Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Bank borrowings Interest bearing bank loans and overdrafts are initially measured at fair value less any transaction fees such as loan arrangement fees, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds and the settlement or redemption of borrowings is recognised over the term of the borrowings. Derivative financial instruments Certain financial instruments are entered into by the Directors on behalf of the Group to hedge against interest rate fluctuations. These include interest rate swaps, options, collar and caps. The Group does not hold or issue derivatives for trading purposes. Such derivative financial instruments are initially recognised at fair value on the date at which a derivative contract is entered into and are subsequently remeasured at fair value at each reporting date. 31 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 4. Significant accounting policies continued The Directors estimate the fair value annually for these financial instruments using the year end yield curve to extract the markets estimate of future pricing for interest rates, this valuation is then considered alongside two valuations obtained from banks (one being HSBC bank – the counterparty to these agreements) in deciding the most appropriate value. This is an estimation and as such there is uncertainty to the fair value shown within the accounts. For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken directly to the income statement for the year. None of the Group’s derivative financial instruments qualify for hedge accounting. Available for sale investments Under IAS 39, these investments are carried at fair value and classified in the statement of financial position as available for sale investments (shares). Fair values of these investments are based on quoted market prices where available. The fair value of the available for sale investments in unquoted equity securities cannot be measured reliably and they have therefore been measured at cost. Movements in fair value are taken directly to equity. When these investments are considered impaired in accordance with the requirements of IAS 39, the impairment losses are recognised in the income statement. On realisation of the available for sale investments, the cumulative gain or loss previously recognised through equity is reclassified from reserves to the income statement. The Group has not designated any financial assets that are not classified as held for trading as financial assets at fair value through the income statement. The available for sale investments represent investments in listed and unquoted equity securities that offer the Group the opportunity for return through dividend income and fair value gains. They have no fixed maturity or coupon rate. Those shares that are expected to be held for the long term are shown as non-current assets and those that are held for short term are shown as current assets. Impairment of available for sale investments At each Statement of Financial Position date the Group reviews any decline in the fair value of available for sale investments to determine whether there is any objective evidence that those assets are impaired. If the asset is judged to be impaired the cumulative loss that had been recognised in other comprehensive income is reclassified from equity to the Income Statement being the difference between the acquisition cost and the current fair value, less any impairment loss for that financial asset previously recognised in the Income Statement. Provisions Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the statement of financial position date, and are discounted to present value where the effect is material. Stock properties Properties that are purchased for future sale are classified as stock properties. Stock properties are valued at the lower of cost and net realisable value. Cost comprises the cost of the property, and those overheads that have been incurred in bringing the stock properties to their present condition. Net realisable value represents the estimated selling price less all estimated costs to be incurred in marketing, selling and distribution. Inventories Stock and work in progress has been valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. Investments in associates Associates are those entities in which the Group has the ability to exert significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power, unless it can be shown otherwise, such as other stakeholders having greater influence reducing the Groups influence so that it is not significant. Panther Securities P.L.C. 32 Investments in associates are accounted for using the equity method and are recognised initially at cost. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income. When the Group’s share of losses exceeds its interest (being equity interest and long term loans) in an equity-accounted investee, the carrying amount of that interest is reduced to zero and the recognition of further losses is discontinued. 5. Revenue and cost of sales The Groups’ only operating segment is investment and dealing in property and securities. The majority of the revenue, cost of sales and profit or loss before taxation being generated in the United Kingdom. The Group is not reliant on any key customers. 6. Loss for the year The loss for the year is stated after charging: Depreciation of tangible fixed assets – owned by the Group Fees payable to the Group’s auditor for the audit of both the parent company and the Group’s annual report and accounts Fees paid to the Group’s auditor for other services: The audit of the parent’s subsidiaries Other services provided 7. Staff costs Staff costs, including Directors’ remuneration, were as follows: Wages and salaries Social security costs Pension contributions The average monthly number of employees, including Directors, during the year was as follows: Directors Other employees 2014 £’000 95 3 67 6 2014 £’000 718 73 36 827 6 16 22 2013 £’000 106 4 64 6 2013 £’000 698 71 36 805 6 16 22 Discontinuing operations include staff costs of £917,000 (2013: £882,000) and 20 members of staff (2013: 19). 8. Directors remuneration Emoluments for services as Directors 2014 £’000 288 2013 £’000 250 There are no Directors with retirement benefits accruing under money purchase pension schemes in respect of qualifying services. Please refer to the Directors’ Report for information on the highest paid Director and in respect of individual Directors emoluments. 33 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 8. Directors remuneration continued Key management are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. In the opinion of the Board, the Group’s key management comprises the Executive and Non-Executive Directors of Panther Securities PLC. Information regarding their emoluments is set out below. The following disclosures are in respect of employee benefits payable to the Directors of Panther Securities PLC across the Group and are thus stated in accordance with IFRS: Short term employee benefits (salaries and benefits) 9. Investment income Interest on bank deposits Dividends from equity investments 10. Finance costs Interest payable on bank overdrafts and loans Interest payable on finance lease liabilities* 2014 £’000 295 2014 £’000 10 11 21 2014 £’000 4,719 544 5,263 2013 £’000 277 2013 £’000 9 15 24 2013 £’000 4,682 544 5,226 * Investment properties held under operating leases have been treated as being held under finance leases in accordance with IAS 40. 11. Income tax credit The charge for taxation comprises the following: Current year UK corporation tax Prior year UK corporation tax Current year deferred tax (credit)/expense Income tax (credit)/expense for the year 2014 £’000 260 (80) 180 (495) (315) 2013 £’000 319 (227) 92 990 1,082 Domestic income tax is calculated at 21.50% (2013 – 23.25%) of the estimated assessable profit or loss for the year. The future provision for deferred tax has been calculated on the basis of 20.0% (2013 – 20.0%). Panther Securities P.L.C. 34 The total charge for the year can be reconciled to the accounting profit or loss as follows: Profit before taxation Profit on ordinary activities before tax multiplied by the average of the standard rate of UK corporation tax of 21.50% (2013 – 23.25%) Tax effect of expenses that are not deductible in determining taxable profit Dividend income not allowable for tax purposes Capital allowances for the year in excess of depreciation Non taxable movement in fair value of investment properties Non deductible movement in fair value of available for sale investments (shares) Non deductible movement in fair value of financial instruments Tax effect of non deductible loss in associate Disposal of properties or shares Prior year corporation tax over provision Tax (credit)/charge 2014 £’000 4,210 905 115 (2) (59) 2014 % 2013 £’000 8,241 2013 % 21.5 1,916 23.25 2.8 — (1.4) 69 (3) (53) 0.8 — (0.6) (1,361) (32.3) (1,002) (12.2) 2 148 — 17 (80) (315) — 3.5 — 0.4 (1.9) 126 477 48 (269) (227) 1,082 12. Profit or loss attributable to members of the parent undertaking Dealt with in the accounts of: – the parent undertaking – subsidiary undertakings A reconciliation of Parent Company profit or loss is provided in note 31. 13. Dividends Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 31 December 2014 of 9p per share (2013 of 9p per share) Interim dividend for the year ended 31 December 2014 of 3p per share (2013 of 3p per share) 2014 £’000 (16,004) 20,696 4,692 2014 £’000 1,546 525 2,071 1.5 5.8 0.6 (3.3) (2.8) 2013 £’000 (385) 7,458 7,073 2013 £’000 1,518 516 2,034 35 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 13. Dividends continued 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. 14. 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. 15. Plant and equipment Fixtures and Equipment £’000 Motor Vehicles £’000 Cost At 1 January 2013 Additions At 1 January 2014 Transfer to assets classified as held for sale Additions Disposals At 31 December 2014 Accumulated depreciation At 1 January 2013 Depreciation charge for the year At 1 January 2014 Transfer to assets classified as held for sale Depreciation charge for the year Disposals At 31 December 2014 Carrying amount At 31 December 2014 At 31 December 2013 At 1 January 2013 895 112 1,007 (256) 90 (191) 650 504 123 627 (111) 94 (145) 465 185 380 391 30 — 30 — — (22) 8 20 4 24 — 1 (17) 8 — 6 10 Total £’000 925 112 1,037 (256) 90 (213) 658 524 127 651 (111) 95 (161) 474 185 386 401 Panther Securities P.L.C. 36 16. Investment property Fair value At 1 January 2013 Additions Disposals Transferred to stock properties Transferred from stock properties Fair value adjustment on property held on operating leases Revaluation increase At 1 January 2014 Additions Disposals Transferred from stock properties Fair value adjustment on property held on operating leases Revaluation increase At 31 December 2014 Carrying amount At 31 December 2014 At 31 December 2013 Investment Properties £’000 153,156 5,326 (1,790) (253) 1,005 (2) 742 158,184 3,171 (1,250) 200 (3) 13,110 173,412 173,412 158,184 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: Cost of investment properties 2014 £’000 118,243 2013 £’000 114,716 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). 37 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 16. Investment property continued 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). Panther Securities P.L.C. 38 17. Subsidiaries Details of the Company’s subsidiaries at 31 December 2014 are as follows: Name of subsidiary Country of incorporation and operation Activity Proportion of Proportion of voting power held % ownership interest % Panther Trading Limited Great Britain Property Panther (Dover) Limited (*) Great Britain Property Panther Developments Limited Great Britain Property Panther Shop Investments Limited Great Britain Property Panther Shop Investments (Midlands) Limited Great Britain Property Panther Investment Properties Limited Great Britain Property Panther (Bromley) Limited (***) Great Britain Property Snowbest Limited Great Britain Property Surrey Motors Limited (****) Great Britain Property Westmead Building Company Limited (*) Great Britain Property Multitrust Property Investments Limited Great Britain Property Etonbrook Properties PLC Great Britain Non-trading Northstar Property Investment Limited Great Britain Property Panther (VAT) Properties Limited Great Britain Property Northstar Land Limited Great Britain Property London Property Company PLC Great Britain Dormant Eurocity Properties PLC Great Britain Property Eurocity Properties (Central) Limited (**) Great Britain Property CJV Properties Limited (**) Great Britain Property MRG Systems Limited Panther AL Limited Great Britain Trading Great Britain Property Panther AL (VAT) Limited Great Britain Property Melodybright Limited Great Britain Property TRS Developments Limited Great Britain Property Abbey Mills Properties Limited Great Britain Property 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 75 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 75 100 100 100 100 100 * – 100% subsidiaries of Panther Shop Investment (Midlands) Limited ** – 100% subsidiaries of Eurocity Properties PLC *** – 100% subsidiary of Surrey Motors Limited **** – 95% owned by Panther Securities PLC/5% owned by Panther (Bromley) Limited All companies have a 31 December year end and have been included in the consolidated financial statements. MRG Systems Limited is classified as held for sale as at 31 December 2014. Its profit for the year is shown as profit from discontinuing operations. 39 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 18. 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. Group transactions with associate: Rent receivable from associate recognised in year Trade receivables and accrued income Trade receivables and accrued income – overdue Provision Other receivables – overdraft facility drawn Provision on overdraft 2014 £’000 368 1,200 1,200 (1,200) 622 (622) 2013 £’000 501 1,330 1,208 (1,208) 622 (404) 19. Discontinuing operations MRG Systems Limited, an information display system developers business, is a subsidiary of Panther Securities PLC as the Group owns 75% of its share capital. MRG Systems Limited was an operating segment whose principal activity is that of electronic designers, engineers and consultants. 71% of its revenues arose in the United Kingdom and 100% of its cost of sales. The Group is currently marketing MRG Systems Limited and as such its results have been separated out and it has been shown as discontinuing operations. The Group instructed business brokers before the period end. The financial information of MRG Systems Limited for the period ended 31 December 2014 is set out below: Profit and loss account Revenue and other income Cost of sales Administrative expenses Finance costs Profit/(loss) for the period Balance sheet Non-current assets Current assets Non-current liabilities Current liabilities Net assets Panther Securities P.L.C. 40 31 December 2014 £’000 31 December 2013 £’000 2,313 (1,045) (1,096) (5) 167 57 603 660 — (333) 327 1,827 (834) (1,076) (3) (86) 137 399 536 (86) (290) 160 Within MRG Systems Limited’s creditors, there are two intercompany loans with Panther Securities PLC, one of £45,000 which accrues interest at 8% per annum, and the other non-interest bearing totalling £60,000 at the period end. The Group does not currently charge MRG Systems Limited a rental for the freehold property owned by the Group, however MRG Systems Limited do pay the rates for the entire building even though they occupy only part. 20. Available for sale investments (shares) Cost or valuation At 1 January 2013 Impairment on revaluation through income statement Movement in fair value taken to equity At 1 January 2014 Reversal of impairment on revaluation through income statement Additions At 31 December 2014 Comprising at 31 December 2014: At cost At valuation/net realisable value Carrying amount At 31 December 2014 At 31 December 2013 Non-current assets £’000 1,761 (522) (156) 1,083 33 63 1,179 542 637 1,179 1,083 The available for sale investments represent investments in listed and unquoted equity securities that offer the Group the opportunity for return through dividend income and fair value gains. They have no fixed maturity or coupon rate. The fair values of the listed securities are based on quoted market prices. The available for sale securities carried at fair value are classified as level 1 in the fair value hierarchy specified in IFRS 13. The fair value of available for sale investments in unquoted equity securities, which are not publically traded, cannot be measured and have therefore been shown at cost. The valuation of the available for sale investments is sensitive to stock exchange conditions. Panther Securities PLC holds 19.9% of the issued share capital of Beale PLC at the year end. This has been treated as an investment rather than as an associate under IAS 28, since, apart from holding less than 20% of the issued share capital, the Group does not have the ability to exercise significant influence. After the year- end, the Company sold its entire shareholding in Beales PLC to English Rose Enterprises Limited a Company wholly owned by Portnard Limited (Panther’s largest shareholder). Simon Peters and Andrew Perloff are directors of English Rose Enterprises Limited. The Group sold its holding to this company for 6p a share in February 2015. The offer had been made to all shareholders in Beales PLC and accepted by over 75% of them. This disposal will crystallise a further £244,000 loss in our accounts for 2015, but will also realise approximately £244,000 of cash. Price risk For the year ended 31 December 2014 if the average share price of the portfolio was 10% lower there would be a further impairment charge in the year of £64,000 to the Income Statement and £nil of valuation movements charged to equity. Corresponding gains would be seen for a 10% uplift. 41 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 21. Stock properties Stock properties 2014 £’000 991 2013 £’000 1,450 The cost of stock properties recognised as expense and included in cost of sales amounted to £nil (2013 – £nil). Impairments of £259,000 have been recognised against stock properties (2013 – £259,000). The market value of stock properties is £2,021,000 (2013 – £2,965,000). £1,920,000 of stock properties at market value have been provided as security for the bank loan from HSBC and Santander referred to in note 27. The market value shown as at 31 December 2014 was valued independently by GL Hearn (2013 – were valued internally by the Directors). The stock properties are held at the lower of cost and market value and as such any uplift is not recognised in the financial statements. 22. Capital commitments Capital expenditure that has been contracted for but has not been provided for in the accounts The above relates to building works. 23. Trade and other receivables Trade receivables Bad debt provision Other receivables Corporation tax Prepayments and accrued income 2014 £’000 125 2014 £’000 4,588 (2,368) 9 — 2,204 4,433 2013 £’000 — 2013 £’000 5,156 (2,470) 263 123 2,199 5,271 The Directors consider that the carrying amount of trade and other receivables approximates their fair value. Net trade receivables are financial assets. The total of financial assets included within the financial statements at amortised cost is £7,564,000 (2013 – £6,930,000) (which relates to £2,229,000 (2013 – £3,072,000) included in the above and the Group’s cash or cash equivalents). Debts are specifically provided once recovery becomes doubtful. The bad debt provision includes all material doubtful debts that the directors are aware of. Panther Securities P.L.C. 42 Movement in allowance for doubtful debts on trade receivables and cash and cash equivalents: Balance at 1 January 2013 Amount written off as uncollectable Charge/(credit) to income statement Balance at 1 January 2014 Amounts written off as uncollectable Charge/(credit) to income statement Balances at 31 December 2014 Trade receivables £’000 1,370 (128) 1,228 2,470 (1,178) 1,076 2,368 Cash and Cash Equivalents £’000 80 — (18) 62 — (4) 58 Total bad debt provisions £’000 1,450 (128) 1,210 2,532 (1,178) 1,072 2,426 The cash and cash equivalents balances provided against related to balances on account with Kaupthing Singer and Friedlander before they went into administration. The Group at the statement of financial position date had received 82.5p in the pound from an original balance of £343,000. 24. Other financial assets Cash and cash equivalents Cash and cash equivalents comprise of cash held by the Group and short-term bank deposits. The carrying amount of these assets approximates their fair value. Credit risk The Group’s principal financial assets are bank balances/cash and debtors. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. Kaupthing Singer and Friedlander went into administration and some of its balances are provided against (see note 23). Further information on the general Group’s credit risk is detailed within the Group Strategic Report. 25. Share capital Allotted, called up and fully paid 17,487,295 (2013 – 17,186,287) ordinary shares of £0.25 each 2014 £’000 4,372 2013 £’000 4,297 The Company has one class of ordinary shares which carry no fixed right to income. During 2014 301,008 (2013: 317,287) ordinary shares were issued in the period as a consequence of the scrip dividend. 43 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 26. Capital reserves Share premium account At 31 December Capital redemption reserve At 31 December 27. Bank loans Bank loans due within one year (within current liabilities) 2014 £’000 4,692 604 2014 £’000 1,140 2013 £’000 3,750 604 2013 £’000 3,170 Bank loans due within more than one year 71,058 68,760 (within non-current liabilities) Total bank loans Analysis of debt maturity Trade and other payables**: Bank loans repayable On demand or within one year In the second year In the third year to the fifth year After five years 72,198 71,930 2014 £’000 Interest* — 1,884 1,097 46 41 2014 £’000 Capital 5,083 1,140 70,637 420 183 2014 £’000 Total 5,083 3,024 71,734 466 224 3,068 77,463 80,531 2013 £’000 Total 5,407 4,976 4,871 66,753 381 82,388 * based on the year end 3 month LIBOR floating rate – 0.563%, and bank rate of 0.50% ** Trade creditors, other creditors and accruals In July 2011 the Group completed on a £75,000,000 facility, with HSBC and Santander, which they initially drew down £60,000,000 the fixed term element. After drawing £1,197,000 in 2014 (2013 – £2,800,000 drawn) on the revolving element of the facility the Group has £1,503,000 left undrawn at the year end. The loan did have repayments of £3,000,000 that are due on the third, and fourth anniversaries of drawdown and is fully repayable in July 2016. However by mutual agreement these were reduced to £1,000,000 on the third and fourth anniversary and as such £1,000,000 was repaid in July 2014. The Natwest bank loan was £883,000 at the year end and is repayable over its life to September 2022. Bank loans are secured by fixed and floating charges over the assets of the Group. 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. Panther Securities P.L.C. 44 28. 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. Asset at 1 January 2013 Credit to equity for the year Debit to profit and loss for the year Asset at 1 January 2014 Credit to equity for the year Credit to profit and loss for the year Asset at 31 December 2014 Deferred taxation arises in relation to: Deferred tax Deferred tax liabilities: Investment properties Deferred tax assets: Tax allowances in excess of book value Available for sale investments (shares) Derivative financial liability Net deferred tax asset Total £’000 1,674 36 (990) 720 — 495 1,215 2013 £’000 2014 £’000 (4,647) (3,193) 455 512 4,895 1,215 460 521 2,932 720 The aggregate amount of temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, for which deferred tax liabilities may arise, have not been recognised. As at 31 December 2014 the substantively enacted rate was 20% (2013: 20%) and this has been used for the deferred tax calculation. 45 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 29. Trade and other payables Trade creditors Social security and other taxes Other creditors Obligations under finance leases (see note 33) Accruals and deferred income 2014 £’000 3,285 1,132 850 544 5,870 11,681 2013 £’000 3,157 779 1,313 564 3,513 9,326 Trade creditors and accruals comprise amounts outstanding for trade purchases and on-going costs. The Directors consider that the carrying amount of trade payables approximates their fair value. All trade and other payables are due within one year. Trade creditors and accruals are financial liabilities. Liabilities included within the financial statements at amortised cost total £83,879,000 (2013 – £81,256,000) (includes payables above and the long term and short term borrowings). 30. 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 Rate 7.06% 6.63% Bank loans Interest is charged as to: Fixed/Hedged HSBC Bank plc* HSBC Bank plc** Unamortised loan arrangement fees Floating element HSBC Bank plc Natwest Bank plc 2014 £’000 35,000 25,000 (182) 11,497 883 72,198 2013 £’000 35,000 25,000 (433) 11,300 1,033 71,900 2013 Rate 7.06% 6.63% 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. Panther Securities P.L.C. 46 Financial instruments for Group and Company The derivative financial assets and liabilities are designated as held for trading. Derivative Financial Liability Interest rate swap Interest rate swap Net fair value (loss)/gain on derivative financial assets Hedged amount £’000 35,000 25,000 Duration of contract remaining ‘years’ 23.69 6.92 Average rate 5.06% 4.63% 2014 Fair value £’000 2013 Fair value £’000 (19,282) (10,599) (5,193) (4,063) (24,475) (14,662) (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. 47 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 31. Parent company profit and loss account As permitted under Section 408 of the Companies Act 2006, no income statement is presented for the parent company. Reconciliation of parent company profit and loss (Loss)/profit of parent company before intercompany adjustments Add: (Reversal)/increase of write off of intercompany debt (removed on consolidation) Add: Impairment of investment in subsidiary/associate (removed on consolidation) Less: intercompany dividends (removed on consolidation) Loss attributable to members of the Parent undertaking as per note 12 32. Contingent liabilities There were no contingent liabilities at the year end. 2014 £’000 (8,958) (407) — (6,639) (16,004) 2013 £’000 5,984 1,175 180 (7,724) (385) 33. Operating lease arrangements and obligations under finance leases The Group as lessor The Group rents out its investment properties under operating leases. Rental income for the Group is disclosed in note 5. The Group paid rent under non-cancellable operating leases in the year of £714,000 (2013 – £732,000). The majority of these non-cancellable lease obligations are long leasehold investments in which the Group receives a profit rent. These investments often have rents payable, often with a contingent element (for example paying a proportion of collected rents), and a minimum rent obligation that is due to the superior landlord. The average lease length is 78 years. The minimum rental payment obligations due under these operating leases and anticipated rental income derived from these investments are shown below. The difference between the rents payable in the year of £714,000 and the minimum for the year of £544,000 is related to the contingent element only payable out of rents receivable. Minimum future payments under non-cancellable operating leases (Lessee) Payable within one year Payable between one year and five years Payable in more than five years 2014 £’000 544 2,176 43,512 46,232 2013 £’000 564 2,256 43,956 46,776 Panther Securities P.L.C. 48 Anticipated rental income derived under non-cancellable operating leases (Lessor) Payable within one year Payable between one year and five years Payable in more than five years 2014 £’000 3,112 12,448 240,758 256,318 2013 £’000 3,161 12,644 247,887 263,692 Obligations under finance leases Investment property held under an operating lease is initially accounted for as if it were a finance lease, recognising as an asset and a liability the present value of the minimum lease payments due by the group to the freeholder. Subsequently and as described in accounting policies, the fair value model of accounting for investment property is applied to these interests. Obligations under finance leases due within one year (included within current liabilities) Obligations under finance leases due within one to five years Obligations under finance leases due in more than five years (included within non-current liabilities) Total obligations under finance leases 2014 £’000 544 1,837 5,201 7,038 7,582 2013 £’000 564 1,871 5,150 7,021 7,585 34. Events after the statement of financial position date Details of the sale of shares in Beale PLC are given in notes 20 and 35. After the year end the Directors of the Group have made the decision to stop marketing MRG Systems Limited for sale. 35. 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 Directors’ emoluments are shown in note 8 and the Directors’ Report. is shown in note 8 to the accounts and Note 18 details the Group’s transactions with its associate. 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 against as, it is unlikely that the Group will seek repayment of this loan. 49 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2014 35. Related party transactions continued A deal assistance fee of £250,000 was paid to Wenhedge Limited, a privately owned company of Andrew Perloff. This private company had assisted Wimbledon Studios Limited 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 Securities PLC sold its entire holding in Beale PLC to English Rose Enterprises Limited a company 100% owned by Portnard Limited. English Rose Enterprises Limited was newly set up to make an offer for the entire shareholding of Beale PLC. Its Directors include Andrew Perloff and Simon Peters. This offer was made to the entire shareholder base of Beale PLC, approved by Beale’s independent Board and their advisors and accepted by over 75% of the shareholder base, as such the Panther Securities PLC Board believes this is fair value. Further details are given in note 20. 36. Approval of financial statements The financial statements were approved by the Board of Directors and authorised for issue on 28th April 2015. Panther Securities P.L.C. 50 Parent Company Balance Sheet Company number 293147 As at 31 December 2014 Notes £’000 2014 £’000 £’000 2013 £’000 38 16,474 16,378 Fixed assets Investments Current assets Debtors Cash at bank and in hand 39 105,649 4,448 110,097 Creditors: amounts falling due within one year 40 (11,381) Net current assets Total assets less current liabilities Creditors: amounts falling due after more than one year Derivative financial liability Net assets Capital and reserves Called up Share Capital Share Premium Account Capital Redemption Reserve Profit and Loss Account Shareholders’ funds 41 30 43 44 44 44 98,716 115,190 (70,315) (24,475) 20,400 4,372 4,692 604 10,732 20,400 106,518 3,239 109,757 (13,194) 96,563 112,941 (67,867) (14,662) 30,412 4,297 3,750 604 21,761 30,412 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 51 Panther Securities P.L.C. Parent Company Cash Flow Statement For the year ended 31 December 2014 Net cash inflow/(outflow) from operating activities Returns on investments and servicing of finance Cash inflow from refinancing Capital expenditure and financial investment Tax paid Equity dividends paid Increase in cash in the year Notes 46 46 46 Reconciliation of operating loss to net cash flow from operating activities Operating loss Decrease/(increase) in debtors Increase/(decrease) in creditors Net cash outflow from operating activities 2014 £’000 4 2,205 197 (63) (80) (1,054) 1,209 2014 £’000 (1,144) 961 187 4 2013 £’000 (4,184) 3,329 2,800 — (12) (1,090) 843 2013 £’000 (2,424) (1,240) (520) (4,184) Panther Securities P.L.C. 52 Notes to the Parent Company Accounts For the year ended 31 December 2014 37. Accounting policies for the Parent Company The Parent Company financial statements have been prepared in accordance with applicable accounting standards in the United Kingdom. Basis of preparation of financial statements The financial statements have been prepared under the historical cost convention as modified by the revaluation of derivatives and equity investments. The results of the Company’s operations are described in the report of the Directors all of which are continuing. In preparing the Financial Statements of the Parent Company the Directors have taken advantage of the exemption offered under FRS 29 to disclose information in regard to the Company’s financial instruments as they are included in the Consolidated Financial Statements of the Group. Revenue recognition Turnover comprises: (1) (2) Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated cash receipts through the expected life of the financial assets to that asset’s net carrying amount. Dividend income from investments is recognised when the Company’s rights to receive payment have been established. Deferred taxation Deferred tax is provided for on a full provision basis on all timing differences which have arisen but not reversed at the balance sheet date. A deferred tax asset is not recognised to the extent that the transfer of economic benefit in the future is uncertain. Any assets and liabilities recognised have not been discounted. Derivative financial instruments The Company uses derivative financial instruments, such as interest rate swaps, to hedge its risks associated with interest rate fluctuations. The Company does not hold or issue derivatives for trading purposes. Such derivative financial instruments are initially recognised at fair value on the date at which a derivative contract is entered into and are subsequently remeasured at fair value at each reporting date. For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken directly to the profit and loss account for the year. None of the Company’s derivative financial instruments qualify for hedge accounting. Investments Investments in subsidiaries undertakings are stated at cost less any provisions for impairment. Under FRS 26, equity investments are carried at fair value and classified in the balance sheet as investments. Fair values of these investments are based on quoted market prices where available. The fair value of the investments in unquoted equity securities cannot be measured reliably and they have therefore been measured at the lower of cost and net realisable value. Movements in fair value are taken directly to equity. When these investments are considered impaired in accordance with the requirements of FRS 26, the impairment losses are recognised in profit and loss. On realisation of the investments, the cumulative gain or loss previously recognised through equity is reclassified from reserves in the profit and loss. The Company has not designated any financial assets that are not classified as held for trading as financial assets at fair value through the profit and loss. The investments represent investments in listed and unquoted equity securities that offer the Company the opportunity for return through dividend income and fair value gains. They have no fixed maturity or coupon rate. Those shares that are expected to be held for the long term are shown as non-current assets and those that are held for short term are shown as current assets. 53 Panther Securities P.L.C. Notes to the Parent Company Accounts continued For the year ended 31 December 2014 38. Fixed asset investments Cost or valuation At 1 January 2014 Impairment through income statement Addition Shares in Group undertakings £’000 Other investments £’000 Total £’000 15,295 1,083 16,378 — — 33 63 33 63 At 31 December 2014 15,295 1,179 16,474 Investments: Listed Unlisted — 15,295 15,295 637 542 1,179 The above investments are shown at market value where there is an active market for these shares. For details of the Company’s subsidiaries at 31 December 2014, see note 17. 39. Debtors Due within one year Trade debtors Corporation tax 2014 £’000 2 149 637 15,837 16,474 2013 £’000 382 57 Amounts owed by Group undertakings 105,439 105,835 Other debtors Prepayments and accrued income 9 50 218 26 105,649 106,518 For further details on the Company’s policy for debtors see note 23. The total financial assets included within the financial statements of the Company at amortised cost are £110,047,000 (2013 – £109,732,000) (which includes items within debtors above and the Company’s cash). Panther Securities P.L.C. 54 40. Creditors: Amounts falling due within one year Trade creditors Amounts owed to Group undertakings Bank loan Social security and other taxes Other creditors Accruals and deferred income 2014 £’000 87 9,746 1,000 32 103 413 2013 £’000 68 9,592 3,000 30 65 439 11,381 13,194 Liabilities included within the financial statements of the Company at amortised cost total £81,696,000 (2013 – £81,061,000) (includes certain items within creditors shown above and the long term borrowings). Further information on the bank loan facility is available in note 27. 41. Creditors: Amounts falling due after more than one year Bank loans 42. Deferred taxation The following potential deferred taxation asset is not recognised: Potential capital losses Fair value of financial instruments 43. Called up share capital Authorised 30,000,000 ordinary shares of £0.25 each Allotted, called up and fully paid 17,487,295 (2013- 17,186,287) ordinary shares of £0.25 each 2014 £’000 70,315 2013 £’000 67,867 2014 £’000 512 4,895 5,407 2014 £’000 7,500 4,372 2013 £’000 521 2,932 3,453 2013 £’000 7,500 4,297 The Company has one class of ordinary shares which carry no right to fixed income. During 2014 301,008 (2013: 317,287) ordinary shares were issued in the period as a consequence of the scrip dividend. 55 Panther Securities P.L.C. Notes to the Parent Company Accounts continued For the year ended 31 December 2014 44. Reserves Balance at 1 January 2013 Profit for the year Movement in fair value of equity investments taken to equity Dividend Balance at 1 January 2014 Loss for the year Movement in fair value of equity investments taken to equity Dividend Balance at 31 December 2014 Share premium £’000 2,886 — — 864 3,750 — — 942 4,692 Capital Redemption £’000 604 — — — 604 — — — 604 Retained earnings £’000 17,967 5,984 (156) (2,034) 21,761 (8,958) (2,071) 10,732 Within retained earnings are unrealised gains of £nil and a deferred tax credit of £512,000 (2013 – unrealised gains of £nil and a deferred tax credit of £521,000) reserves relating to fair value of available for sale investments (shares). 45. Reconciliation of movements in shareholders’ funds (Loss)/profit for the year Movement in fair value of equity investments taken to equity Dividend Movement in shareholders’ funds Opening shareholders’ funds Closing shareholders’ funds 2014 £’000 (8,958) — (1,054) (10,012) 30,412 20,400 2013 £’000 5,984 (156) (1,090) 4,738 25,674 30,412 Panther Securities P.L.C. 56 46. Analysis of cash flows for line items in the cash flow statement Returns on investments and servicing of finance Interest received Interest paid Income from investments Net cash inflow for returns on investments and servicing of finance Cash flows from refinancing Loan paid back New loans received Capital expenditure and financial investment Purchase of fixed asset investments 2014 £’000 12 (4,457) 6,650 2,205 (1,000) 1,197 197 (63) 2013 £’000 6 (4,416) 7,739 3,329 — 2,800 2,800 — At 1 January 2014 £’000 Cash flow £’000 At Non- cash 31 December 2014 items £’000 £’000 Net cash: Cash at bank and in hand 3,239 1,209 — 4,448 Debt: Due within one year Due after more than one year (3,000) (67,867) (67,628) 1,000 (1,197) 1,012 1,000 (1,251) (251) (1,000) (70,315) (66,867) 47. Other commitments At 31 December 2014 the Company had annual commitments under non-cancellable operating leases as follows: Expiry date: Between 1 and 5 years Land and buildings 2014 £’000 11 2013 £’000 11 57 Panther Securities P.L.C. Notes to the Parent Company Accounts continued For the year ended 31 December 2014 48. Related party transactions The compensation of the Company’s key management personnel is shown in note 8 to the accounts and Directors’ emoluments are also shown in note 8 and the Directors’ Report. In respect of Wimbledon Studios Limited this Company was an associate but now has gone into administration, the Company provided a £622,000 (2013 – £622,000) overdraft facility which has been fully provided against. Included in other debtors Panther Securities PLC is a loan to a director of Wimbledon Studios Limited of £62,500 (2013 – £62,500. The loan is unsecured for a maximum term of 3 years and attracts interest of 4% per annum. This has been fully provided against in the year. 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. Further details are given in note 20. There were no further related party transactions during the period other than dividends paid to directors who hold ordinary shares in the Company. 49. Risk management For information on the Company’s risk management please refer to the Group Strategic Report section of the Group accounts. Panther Securities P.L.C. 58 Notice of Annual General Meeting Notice is hereby given that the 81st Annual General Meeting of Panther Securities P.L.C. will be held at Nexia Smith and Williamson, 25 Moorgate, London EC2R 6AY on 19 June 2015 at 11.30 a.m. for the following purposes:- As Ordinary Business 1. To receive and adopt the Group Strategic Report, Directors’ Report, Remuneration Policy and Financial Statements for the year ended 31 December 2014 contained in the document entitled “Annual Report and Financial Statements 2014”. 2. 3. 4. 5. To authorise the payment of a final dividend of 9.0p per ordinary share. To re-elect A. S. Perloff who is retiring by rotation, as a Director. To re-elect J. H. Perloff who is retiring by rotation, as a Director. To re-appoint the auditors Nexia Smith & Williamson and to authorise the Directors to determine their remuneration. As Special Business To consider, and, if thought fit, pass the following resolutions of which resolutions 6, 8 and 9 will be proposed as ordinary resolutions and resolution 7 as a special resolution. 6. That for the purposes of section 551 Companies Act 2006 (and so that expressions used in this resolution shall bear the same meaning as in the said section 551): 6.1 the Directors be and are generally and unconditionally authorised to allot equity securities (as defined in section 560 of the Companies Act 2006) up to a maximum aggregate nominal amount of £2,400,000 to such persons and at such times and on such terms as they think proper during the period expiring at the earlier of 15 months from the date of passing of this resolution and the conclusion of the Annual General Meeting of the Company to be held in 2016 (unless previously revoked or varied by the Company in general meeting) except that the Company may before such expiry make any offer or agreement which could or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities pursuant to any such offer or agreement as if such authority had not expired; and 6.2 this resolution revokes and replaces all unexercised authorities previously granted to the directors pursuant to section 551 of the Companies Act 2006 but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to made pursuant to such authorities. 7. That, subject to the passing of resolution 6, set out in the Notice convening this Meeting, the Directors are empowered in accordance with section 571 of the Companies Act 2006 to allot equity securities (as defined in section 560 of the Companies Act 2006) for cash, pursuant to the authority conferred on them to allot equity securities (as defined in section 560 of the Act) by that resolution and/or to sell equity securities held as treasury shares for cash pursuant to section 727 of the Companies Act 2006, in each case as if section 561 (1) of the Companies Act 2006 did not apply to any such allotment or sale, provided that the power conferred by this resolution shall be limited to: 7.1 the allotment of equity securities in connection with an issue or offering in favour of or sale to holders of equity securities and any other persons entitled to participate in such issue or offering where the equity securities respectively attributable to the interests of such holders and persons are proportionate (as nearly as may be) to the respective number of equity securities held by or deemed to be held by them on the record date of such allotment, subject only to such exclusions or other arrangements as the Directors may consider necessary or expedient to deal with fractional entitlements or legal or practical problems under the laws or requirements of any recognised regulatory body or stock exchange in any territory; 59 Panther Securities P.L.C. Notice of Annual General Meeting continued 7.2 7.3 the allotment or sale (otherwise than pursuant to paragraph 7.1 above) of equity securities up to an aggregate nominal value not exceeding £218,591; and the power granted by this resolution, unless renewed, shall expire at the earlier of 15 months from the date of passing of this resolution and the conclusion of the Annual General Meeting of the Company to be held in 2016 but shall extend to the making, before such expiry, of an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired. 8. That the Company is generally and unconditionally authorised for the purpose of section 701 Companies Act 2006 to make market purchases (as defined in section 693 (4) of the said Act) of ordinary shares of 25p each in the capital of the Company (“ordinary shares”) provided that the Company be and is hereby authorised to purchase its own shares by way of market purchase upon and subject to the following conditions:- 8.1 The maximum number of shares which may be purchased is 2,500,000 ordinary shares; 8.2 8.3 The maximum price (exclusive of expense) at which any share may be purchased is the price equal to 5 per cent, above the average of the middle market quotations of an ordinary share as derived from the London Stock Exchange Daily Official List for the five business days preceding the date of such purchase, and the minimum price at which any share may be purchased shall be the par value of such share; and The authority to purchase conferred by this Resolution shall expire at the conclusion of the next Annual General Meeting of the Company provided that any contract for the purchase of any shares as aforesaid which was concluded before the expiry of the said authority may be executed wholly or partly after the said authority expires. 9. That the directors be authorised to make a payment of up to £25,000 by way of donation to the UK Independence Party. The directors believe that the proposals in resolutions 1-9 are in the best interests of shareholders as a whole and they unanimously recommend that you vote in favour of the resolutions. By order of the Board S. J. Peters Company Secretary Registered Office Deneway House 88-94 Darkes Lane Potters Bar Hertfordshire EN6 1AQ Dated: 28 April 2015 Panther Securities P.L.C. 60 Notes: 1. 2. 3. • Any member of the Company entitled to attend and vote at this meeting is also entitled to appoint a proxy to attend and vote in his stead. Such a proxy need not also be a member of the Company. A shareholder may appoint more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy form is enclosed. To appoint a proxy, shareholders must complete: a form of proxy and return it together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of such authority, to Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, BR3 4TU ; or • a CREST Proxy Instruction (as set out in paragraph 5 below); in each case so that it is received not later than 48 hours before the meeting. To appoint more than one proxy, you will need to complete a separate proxy form in relation to each appointment. Please read the notes on the proxy form. The return of a completed proxy form, will not prevent a shareholder attending the Annual General Meeting and voting in person if he/she wishes to do so. 4. 5. 6. 7. 8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General Meeting and any adjournment(s) of the meeting by using the procedures described in the CREST Manual (available via www.euroclear.com/CREST). CREST personal members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications, and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Company’s agent RA10, by the latest time for receipt of proxy appointments set out in paragraph 2 above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers, should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed any voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior). Any person to whom this Notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder by whom he/ she was nominated, have a right to be appointed (or to have someone else 61 Panther Securities P.L.C. Notice of Annual General Meeting continued For the year ended 31 December 2014 appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1, 2 and 3 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the Company. 9. A statement of all transactions of each Director and his family interests in the share capital of the Company will be available for inspection at the Company's registered office during normal business hours from the date of this notice up to the close of the Annual General Meeting and will be available for inspection at the place of the Annual General Meeting for at least 15 minutes prior to and during the meeting. 10. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company gives notice that only those shareholders included in the register of members of the Company at 5.30 p.m. on 17 June 2015 or, if the meeting is adjourned, in the register of members at 5.30 p.m. on the day which is two days before the day of any adjourned meeting, will be entitled to attend and to vote at the Annual General Meeting in respect of the number of shares registered in their names at that time. Changes to entries on the share register after 5.30 p.m. on 17 June 2015, or, if the meeting is adjourned, in the register of members at 5.30 p.m. on the day which is two days before the day of any adjourned meeting, will be disregarded in determining the rights of any person to attend or vote at the Annual General Meeting. 11. As at 9.00 a.m. on 28 April 2015, the Company’s issued share capital comprised 17,487,295 ordinary shares of 25 pence each. Each ordinary share carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting rights in the Company as at 9.00 a.m. on 28 April 2015 is 17,487,295. 12. Under section 527 of the Companies Act 2006, members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Companies Act 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under section 527 of the Companies Act 2006, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the Companies Act 2006 to publish on a website. 13. Any member attending the meeting has the right to ask questions. The Company must answer any such question relating to the business being dealt with at the meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 14. If you have sold or otherwise transferred all your ordinary shares in the Company, please forward this annual report and accounts to the purchaser or transferee or to the stockbroker, bank or other person through whom the sale or transfer was effected for transmission to the purchaser or transferee. 15. No Director is employed under a contract of service. 16. You may not use any electronic address provided in this Notice, or any related documents including the proxy form, to communicate with the Company for any purposes other than those expressly stated. 17. A copy of this Notice, and other information required by section 311A of the Companies Act 2006, can be found at www.pantherplc.com Panther Securities P.L.C. 62 Explanatory Notes to the Notice of Annual General Meeting The following notes provide an explanation as to why certain resolutions set out in the notice of the Annual General Meeting of the Company to be held on 19 June 2015 are to be put to shareholders. All resolutions save for Resolution 8 are ordinary resolutions and will be passed if more than 50% of the votes cast for or against are in favour. Resolution 8 is a special resolution and requires 75% of the votes cast. Resolution 1 – Laying of accounts and adoption of reports The directors are required by the Companies Act 2006 to present to the shareholders of the Company at a general meeting the reports of the directors and auditors, and the audited accounts of the Company, for the year ended 30 December 2014. The report of the directors and the audited accounts have been approved by the directors, and the report of the auditors has been approved by the auditors. A copy of each of these documents may be found in the document entitled “Annual Report and Financial Statements 2014”. Resolutions 3 and 4 – Re-election of directors In accordance with the Articles of Association of the Company Andrew Perloff and John Perloff will stand for re- election as directors of the Company. Biographical information for the directors and details of why the Board believes that they should be re-elected is shown in the Corporate Governance Report. Resolution 5 – Auditors’ re-appointment and remuneration The Companies Act 2006 requires that auditors be appointed at each general meeting at which accounts are laid, to hold office until the next such meeting. The resolution seeks shareholder approval for the re-appointment of Nexia Smith & Williamson and the giving to the directors the authority to determine the remuneration of the auditors for the audit work to be carried out by them in the next financial year. The amount of the remuneration paid to the auditors for the next financial year will be disclosed in the next audited accounts of the Company. Resolution 6 – Authority to the directors to allot shares The Companies Act 2006 provides that the directors may only allot shares if authorised by shareholders to do so. Resolution 6 will, if passed, authorise the directors to allot shares and to grant rights to subscribe for, or convert securities into, shares up to a maximum nominal amount of £2,400,000, which represents an amount which is approximately equal to 55% of the issued ordinary share capital of the Company as at 28 April 2015 the latest practicable date prior to the publication of the notice. Resolution 7 – Dis-application of statutory pre-emption rights The Companies Act 2006 requires that, if the Company issues new shares for cash or sells any treasury shares, it must first offer them to existing shareholders in proportion to their current holdings. It is proposed that the directors be authorised to issue shares for cash and/ or sell shares from treasury up to an aggregate nominal amount of £218,591 (representing approximately 5% of the Company’s issued ordinary share capital as at 28 April 2015, the latest practicable date prior to the publication of the notice) without offering them to shareholders first in order to raise a limited amount of capital easily and quickly if needed. The resolution also modifies statutory pre-emption rights to deal with legal, regulatory or practical problems that may arise on a rights or other pre-emptive offer or issue. If resolution 5 is passed, this authority will expire at the same time as the authority to allot shares given pursuant to resolution 6. Resolution 8 – Purchase of own shares by the Company If passed, this resolution will grant the Company authority for a period of up to the end of the next annual general meeting to buy its own shares in the market. The resolution limits the number of shares that may be purchased to 5% of the Company’s issued share capital as at 28 April 2015, the latest practicable date prior to the publication of the notice. The price per ordinary share that the Company may pay is set at a minimum amount (excluding expenses) of 25 pence per ordinary share and a maximum amount (excluding expenses) of 5% over the average of the previous five business days’ middle market prices. The directors will only make purchases under this authority if they believe that to do so would result in increased earnings per share and would be in the interests of the shareholders generally. 63 Panther Securities P.L.C. 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