ANNUAL REPORT & FINANCIAL STATEMENTS 2016 Company number (cid:17)(cid:17)293147 The Year in Brief Revenue Rent receivable (Loss)/profit before tax Total comprehensive (loss)/income for the year Net assets of the Group 2016 £’000 14,684 12,983 (1,948) (898) 72,375 2015 £’000 14,443 12,840 8,470 6,852 76,097 (Loss)/earnings per 25p ordinary share (5.5)p 38.7p Dividend per ordinary share (based on those proposed in relation to the financial year) 12p* 22p** Net assets attributable to ordinary shareholders per 25p ordinary share 407p 428p * 3p was paid in 2016 and 9p is proposed (will be paid in 2017). ** 9p was paid in 2015, 10p (special dividend) was paid in 2016 and 3p was proposed. Contents The Year in Brief Directors, Secretary and Advisors Chairman’s Statement Chairman’s Ramblings Group Strategic Report Directors’ Report Corporate Governance Independent Auditors’ Report Consolidated Income Statement 1 2 3 7 11 15 18 20 22 Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Accounts Parent Company Statement of Financial Position Parent Company Statement of Changes in Equity Notes to the Parent Company Accounts Notice of Annual General Meeting Ten Year Review 24 25 26 27 52 53 54 59 64 Consolidated Statement of Comprehensive Income 23 1 Panther Securities P.L.C. Directors, Secretary and Advisors 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 Unicorn House, Station Close, Potters Bar, Hertfordshire, EN6 1TL Company number 00293147 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 Advisors and Joint Brokers Allenby Capital Limited 3 St Helen’s Place, London, EC3A 6AB Joint Brokers Registrars Solicitors Raymond James Investment Services Broadwalk House, 5 Appold Street, London, EC2A 2AG Capita Registrars The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU Howard Kennedy LLP No. 1 London Bridge, London, SE1 9BG DMH Stallard 6 New Street Square, New Fetter Lane, London, EC4A 3BF Brodies LLP 2 Blythswood Square, Glasgow, G2 4AD 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 once again pleased to report our results this time offices. We sold the entire freehold building but retained for the year ended 31 December 2016. There was a the ground floor and part basement on a 999 year lease loss after tax of £953,000, compared to a profit after at a peppercorn. This part of the property produces tax of £6,813,000 for the previous year ended £129,000 pa and with further growth potential because 31 December 2015. of its situation in a prime position in Sutton High Street. A substantial part of the increase in value was reflected Once again, our trading figures are distorted by non- in the previous year’s revaluation but it still produced a cash items. In particular, the increase of an extra profit of £365,000 over the revalued figure for inclusion £5,338,000 to our interest rate swap liability, which was in the 2016 figures. slightly negated by the increase in market value of £318,000 in our total investment portfolio as valued at Queens Road, Southend the year-end by our Directors. I have stated many times that these two items should not really be included in the Income Statement but as notes to the accounts. The reason being that the interest rate swap liability can be so volatile that it could change considerably over a very short period but it rarely affects a company’s ongoing trading abilities. The property revaluations are likewise one-offs depending on timing, subject to a particular valuer’s subjectivity and also not really affecting ongoing trade. Our turnover for the year amounted to £14,684,000, compared to £14,443,000 for the previous year. However, more importantly is our receivable rental income, which has risen to £12,983,000 in the year ended 31 December 2016, compared to £12,840,000 for the previous year. In March 2016, we sold a freehold quadruple shop with upper parts in Queens Road, Southend for £1,050,000, which we considered was a good price for a vacant and non-income producing property. Sparkbrook, Birmingham In April 2016, we sold a non-income producing cleared site in Sparkbrook for £500,000, which was equal to its December 2015 revalued figure, although much higher than its effective original cost some years ago. Coatbridge, Scotland This freehold property, which came with our purchase of Eurocity Properties (Central) Ltd many years ago, is on the opposite side of the road and thus unconnected to our main much larger holding in Coatbridge. Although this property was vacant, it was under offer for letting but unfortunately was seriously damaged by fire in Whilst this is a comparatively small difference, it is the August 2015. This resulted in us receiving insurance balancing figure from many changes which include rent claim proceeds of £476,000 in February 2016 which loss from the sale of the office section of Old Inn House, approximated to its book value. loss of rent from Beales after its CVA, which closed one of the stores that we own, counter balanced by nine Of course, we still own the site’s freehold which has a months’ income from our purchase of Lord Street small value that we hope to be able to realise in due Properties (Southport) Ltd. Disposals Old Inn House, Sutton course. Acquisitions Lord Street Properties (Southport) Ltd In January 2016, we sold the upper part of Old Inn We acquired this family company in March 2016. Lord House for £3,900,000, which comprised 18,000 sq ft of Street Properties (Southport) Ltd was established over 3 Panther Securities P.L.C. Chairman’s Statement continued 100 years ago to own and operate Broadbents building, we are still awaiting a proposal for lease Department Store. Subsequently, it acquired Wayfarers extension on two sections of the site where the Arcade, the finest Victorian arcade in Southport and freeholder is Birmingham City Council. We hold 100 possibly in northern England. year leases at fixed ground rents, one subject to ground The total freehold site is about two acres comprising 75,000 sq ft of retail space with two car parks at the rear of the site. The major part is now occupied by Beales (about 40,000 sq ft) who acquired the trading business some years ago and it is currently one of their profitable stores. The Arcade contains 48 units of which 11 are vacant. The property rental receivable is approximately £580,000 pa with further potential. rent reviews. We had a meeting with the council and their agents about one year ago and expected the council to be able to provide a proposal. We believe we will have a proposal shortly as Birmingham has the same housing shortage as other parts of the UK. However, we have had a number of approaches to purchase the entire development site. There is strong interest and an eventual sale should show a significant increase over book value. The cost of this company, which had no debt, was Bruce Grove, Wickford £4,554,000 including acquisition costs. This was The planning details have been amended so that a purchased out of our existing cash resources but was phased development can take place and this will enable subsequently charged under our loan facilities. the scheme to start prior to acquisition of the adjoining owner’s site which can be phase 2 in due course. This 273-275 Lord Street, Southport should enable us to sell our site soon. We subsequently purchased the freehold of 273-275 Lord Street for £337,000, which contains 6,400 sq ft Swindon over its four floors and is only a few doors away from A planning application to redevelop our indoor tented the Beales store and adjoining at the rear to the car park market into a two storey modern restaurant and leisure giving extra benefits to both properties. It is currently scheme was submitted and recommended for approval vacant and available for letting with no rates payable by the Planning Officers, who agreed it complied with all whilst vacant as the building is listed. the town planning requirements. It was, however, Hall Road, Maldon turned down by the committee! We were however successful when we appealed against this decision and This is a small vacant freehold factory of 5,300 sq ft plus additionally, which is unusual, we won the right to parking for about 20 cars, close to our much larger receive our costs of the appeal. Heybridge estate and backing onto the canal. This has potential for both letting and residential development. A new scheme is about to be submitted for planning This was purchased for £200,000 in August 2016 and which is much larger as it will include a seven or eight is being offered for rent at £24,600 pa. storey residential tower above the leisure units and Development Progress Holloway Head, Birmingham possibly a more profitable scheme. High Street, Broadstairs Having received full and detailed planning permission in We have planning permission for one triple unit shop and November 2015 for this site to include the Girl Guides twelve flats above in the centre of this desirable seaside Panther Securities P.L.C. 4 resort. If we receive a reasonable quote from builders, which is expected shortly, we will probably build and retain the investment after the shops and flats have been let. The shop is currently under offer as a single unit. We currently have planning applications in progress at the following locations:- Location Scheme Reason for delay High Street, Bromley Large retail unit & 21 flats With Planning Department High Street, Ramsgate 20 flats With Planning Department Peckham Rye, Dulwich Mini supermarket & 15 flats Planning Department keeps changing mind New Road, Gravesend Parade of shops with 35-40 flats above Early stages Victoria Street, Wolverhampton 7,000 sq ft supermarket 44 student units or 21 flats Uncertain student demand Maryhill, Glasgow 125 flat units approximately suitable for social housing Early stages Tenant Activity During the year ended space on a site of 9.5 acres in a sought after location 31 December 2016 adjoining the Chelmer and Blackwater canal in the We lost 26 residential tenancies and gained Heybridge Basin area. The local Council has new 37 residential tenancies producing a net gain of proposals for this area, which will probably be beneficial £86,760 p.a. We lost 21 commercial tenancies and to us in the long term. We intend to refurbish and gained 61 commercial tenancies producing a net gain restore the property, where required and in due course of £491,019 thus total rental gains of £577,779 p.a. offer out for letting at what we expect to be a higher Furthermore, a tenant’s CVA altered two of Beale’s leases resulting in a rental loss of £234,000. Therefore, William Nash PLC rent than previously received. net rental gain for the year was £343,779. In April 2017 the Group sold its entire holding in William Post Balance Sheet Events Heybridge, Maldon Nash PLC, an unlisted property company, for £1,486,000, which was held at cost and shown at the year-end on the Consolidated Statement of Financial In March 2017 we received a £1,995,000 payment to Position within “Available for sale investments” at a accept a surrender of the lease four years before the value of £627,000. end of term on our industrial unit at Heybridge, Maldon, Essex. The rental forgone was £500,000 p.a. Dividends The property is just under 200,000 sq ft of mainly high 29 November 2016 and a final dividend of 9p per share bay, brick built, single storey warehouse and industrial for the year ended 31 December 2016 will be An interim dividend of 3p per share was paid on 5 Panther Securities P.L.C. Chairman’s Statement continued recommended for payment at our Annual General depressed and is the exact opposite of our Prime Meeting. Proposed payment date is 21 July 2017 to Minister’s stated aim of helping those poorer parts of shareholders on the register at the close of business on the country and workers at lower pay levels, such as 7 July 2017 (ex-dividend on 6 July 2017). shop assistants etc. It is almost certainly not deliberate I have decided to waive the proposed final dividend on questionable statistics – not lies or damned lies, but my personal holding of shares in Panther, as I feel the statistics. Unfortunately, when legislators make stupid recently increased tax on dividends is excessive and mistakes, they only take action after many members of and I suspect her ministers have provided her with abhorrent. I also suspect in due course it will prove the public have been harmed. counter-productive as a revenue raising measure. Political Donations Finance I have once again submitted a resolution at the Annual On 19 April 2016, we completed the renewal of our £75 General Meeting for the Company to contribute million joint facility with HSBC and Santander for a £20,000 to the UK Independence Party. They have further 5 year term. This loan also gives us the option of been successful in their main aim to date and need to drawing a further £10 million with bank approval. In be sustained to make them a second or third force in total, we potentially have an additional £15 million our political system. My view is that the present second purchasing capacity plus our cash balances. The loan and third political forces are pretty useless. is better, in most aspects, for the Company than before including keener margins, lower arrangement and non- Prospects utilisation fees. Business Rates We are a comparatively entrepreneurial company and thus, nimble enough to be able to take advantage of special situations that may occur and have a good I have commented at length about the unfairness of the spread and constant rental income, which carries us new business rate regime. However, as a property through any short term turbulence that may occur over company where most of its portfolio is based outside the next few years of uncertainty. of London and also holding a substantial portfolio of investments in Scotland, I believe its revaluation, despite Finally, I would like to thank our small but dedicated its vindictive phasing flaws will be good for us. This is team of staff, growing team of financial advisers, legal mainly because many of our vacant properties are in advisers, agents and accountants for all their hard work Scotland, where their government has not introduced a during the past year, which has been more demanding phasing scheme. This means that some of these than usual, and of course, our tenants, most of whom properties will shortly have commercial rates payable pay their rents and excessive and high unfair business reduced by over 50% making them far more attractive rates. to potential tenants. Additionally, most of our properties have rateable values below £100,000, where there are Andrew S Perloff more palatable phasing reductions. The ill-conceived Chairman phasing reduction arrangement introduced for larger retail properties will mainly adversely affect those towns 25 April 2017 far away from London that are already commercially Panther Securities P.L.C. 6 Chairman’s Ramblings 2016 was a year about personalities and surprises and nines. I bet they spent more time on their make-up than consequently, I feel my stories must reflect this. the time they’ll spend here.” I looked across the hall and About 10 years ago, I made my annual visit to the to sidle in inconspicuously. “You are quite right, it synagogue on the Day of Atonement, which many is absolutely disgraceful,” I nodded solemnly in people consider to be the most important religious day agreement, “but there is nothing I can do about it – it is in the Jewish calendar. my wife and daughter!” saw a pair of attractive, smartly dressed women trying The Day of Atonement starts at dusk and lasts for 25 My fellow congregant went red in the face and started hours until the dusk of the following day. During this to apologise but I reassured him I wasn’t in the least time neither food nor liquid should be consumed for the offended – only amused. entire period. The first evening starts with a short prayer and long sermons, which probably only God I was still laughing when I told the story to some friends understands. It continues early the next day with even later. They were surprised that I had not only been more very long, repetitive prayers and services with amused rather than annoyed but had also failed to take occasional short speeches for the few people who are him to task – reminding him that this was in fact a day still awake. for forgiveness. It brought to mind another story that happened about fifty years earlier but somehow felt I had been doing my repentance, by way of prayer, for relevant. most of the day and found myself marvelling at how many sins we need forgiveness for. These include the In the 1950’s, my father would sometimes take my sins deliberately committed, those unintentionally brother and me for a Sunday outing from our home in committed, those committed by others in our name, south London to the markets in and around Petticoat sins committed unknown to us and also the sins of Lane. This was an exciting outing for us, but made failing to do something which we should have done. special as on this particular occasion he took me alone. These prayers requesting forgiveness are repeated many, many times during this holy time. Petticoat Lane was basically a huge street market and trading area encompassing Wentworth Street, On this particular occasion, towards the end of the fast, Middlesex Street, Brick Lane, Club Row and Cutler when evening was approaching and stomachs were Street, just east of the City of London’s main rumbling I found myself seated beside a fellow stockbroking area. All possible needs could be catered congregant whom I knew only vaguely by sight. Like for here in this teeming market. In the 1950’s it was still me, he had been praying for forgiveness for maligning an area mainly inhabited by Jewish traders, immigrants others, bearing false witness, tale bearing and failing to from the Pogroms of Eastern Europe and those who understand and forgive other people’s weaknesses, managed to escape the practically wholescale when he suddenly turned to me – “Look at that!” He destruction of Jewry in Europe during the Second hissed theatrically. He motioned to the entrance of the World War. The area was frenetic with activity on synagogue. “Those two women, dressed up to the Sundays. 7 Panther Securities P.L.C. Chairman’s Ramblings continued We went there ostensibly to buy Jewish style food and However, whilst my father never once mentioned my delicacies that were just not available in south London uncle’s predilection, they were very fond of each other in those days – smoked salmon, pickles, beigels, and so the visits were a twofold pleasure of meeting special bread and kosher meats. Besides the lure of this family and friends and restocking our larder. My uncle, cornucopia of deli delights, I now realise my father liked the self-appointed and unpaid manager, rushed around to visit this part of London because he had been born serving and helping and shouting orders while Mossy’s and brought up there until the war, marriage and family mother, who must have been in her 70’s but made necessitated a move to the suburbs. Surprisingly, we Methusela look youthful, would sit on a stool on the always found somewhere to leave our car – no parking outside pavement selling “smaltz herring” which she restrictions, yellow or red lines existed! would pluck from the barrel with her bare and rather pickled hands for customers. Our most important port of call was to Mossy Marks of the Lane. It was a corner shop in Petticoat Lane, a Mossy, his mother and sister all lived in the spacious delicatessen stuffed full of Jewish style delights. The upper part of the shop and on the few occasions we front counter delivered smoked salmon sliced to went upstairs, I was astonished how luxurious the perfection by Mossy himself. Resplendent in his apartment was in comparison with the outside street immaculate, white serving coat he was a delightful, appearance. My mother remembered visiting the old happy man, always smiling, always charming. He knew Mrs Marks who despite having had her second heart all of his customer’s names, their families, relatives, attack, managed to jump out of her sick bed to shout problems and businesses. His customers were given out the window to her temporary replacement at the snippets of the smoked salmon whilst patiently waiting barrels “Wrap them nicer!” in Yiddish of course. in the queue. He positively oiled his charming way across the shop floor. Whilst my market visits were memorably enjoyable, the icing on the cake was on the rare times my father would The delicatessen had been started by his father, some take us to lunch at Blooms – this was even better on 35 years earlier but it was Mossy who built its reputation this particular occasion, as there was only the two of nationwide, if not worldwide. They even had their own us! salmon and fish smokery and pickling factory and at one time, a small farm in Essex. The family business Blooms was a kosher restaurant, even more famous also included his brother, sister and mother who also than Mossy Marks of the Lane. It was a big restaurant worked there. We knew Mossy because my father’s in Whitechapel and, of course, Sundays was its busiest older brother, my favourite Uncle Dave, was Mossy’s day. The front of the shop had the salt beef counter closest friend and partner although not in the business which you could eat at a long counter sitting on tall sense and long before it became so fashionable as to stools, but the main restaurant was at the back. On a be practically obligatory. They had been together for Sunday there was always a long queue and although over 30 years. Not only was this relationship frowned nowadays I hate queuing it was exciting seeing all the upon and not spoken about, it was at that time also people and activity and tasting the little samples of salt seriously illegal. Of course, I knew and understood beef, salami or matzos with chopped liver they brought nothing about that type of thing and it all went over my around while you waited for a table. innocent head. Panther Securities P.L.C. 8 Whilst in the line, I would watch all the different diners. coat in Hendon”. She then carried on venting her anger It could best have been described as straight out of a on all furriers for their cheating ways. Her venom and Damon Runyon’s novel about ‘Mindy’s’ in New York. A diatribe against furriers was beginning to upset and noisy crowd full of interesting characters, of all shapes aggravate me. Although I would not have dared to and sizes. Everyone seemingly knew each other and interfere in adults’ conversation, my father put his hand shouted to their friends at different tables, Claridges or on my arm to indicate not to say anything. He then, to the Savoy, it was not! my surprise, started to agree with her and encouraged her complaints with comments like, “They charge to We arrived at the front of the queue and a small, fat make a coat smaller and then keep the fur and charge cherubic-faced waiter came and spoke to Dad, “Hello someone else using that fur to make another coat Ben, vos much zee (how are you), I have a nice table for bigger, overcharge for cleaning, by giving it a big, fancy you”. He then took us to a table for four people, one name like Hollanderizing ……..” and on he went. place occupied by a pleasant looking, slightly chubby older woman (she may have been nearly 40) and the By the time her strudel arrived, she had practically chair beside her had a small fur jacket draped on its blamed furriers for the first and second world wars, the back. We sat opposite her and it. The waiter had, of advent of Hitler and, rather incongruously, socialism and course, asked the rather perfunctory question “Do you high taxes. The strudel was a welcome diversion, mind sharing with these two nice gentlemen” before, halting her tirade and convincing me to have that as a plonking down the menus and scarpering off. dessert. I already knew what I would have. I started with mixed She then looked at my father and said “I have been chicken soup, then half a portion of salt beef (lean), a talking so much about my problems, I have forgotten pair of viennas and a latke. Dad had the soup and a to ask you what you do for a living”. Under the whole portion of salt beef (fatty) with a latke. We ordered circumstances, I held my breath not knowing what he and Charlie, our waiter, rushed off to the kitchens. The would say. soup came quickly. Mine had a couple of small unformed eggs boiled in the soup and my father had “Oh, I am a furrier!” the neck bone of the chicken, which he liked to suck. Our waiter obviously knew our particular tastes. We The woman laughed so uproariously that many other polished off the soup quite quickly and then my father diners turned round to see the joke. “Oh dear. I really smiled at our fellow diner, who had finished half a roast have been a bit naughty, haven’t I? They can’t all be chicken, some potatoes and greens and had just gunafs can they?” ordered apple strudel. My father remarked “That’s a very nice mink stole that something in fur, do come to me” and he gave her his My father replied “A lot are, but next time you need you have there”. She replied quickly “Thank you, you business card. are right, it is very nice and now I know why they call it a stole. I overpaid by one hundred and fifty pounds. My She finished her meal and left well before us, leaving a local furrier was a gunaf (a thief)”. My father said “That’s generous tip and after she had gone, I asked my father a shame, it is so nice”. “All furriers are gunafs” she said. why he had let her say such nasty and untruthful things “My sister-in-law was cheated by one. She bought her about all furriers. He told me you do not change 9 Panther Securities P.L.C. Chairman’s Ramblings continued people’s minds by violently disagreeing with them. You Most people do not like eating their own words or giving must let them vent their anger and encourage them to grovelling apologies for their own stupidity, but it will be talk it through until they have got it out of their system necessary, if two of the world’s major nations do not or encourage them to be so ridiculous that even they overcome their attitudes to each other’s democratically eventually find their anger funny. “You never know, you elected leaders, to rename the two countries Dis-United may come across them again.” He smiled. Kingdom and Dis-United State(s) of America. And so it came to be, about two months later, she Perhaps if our government appointed someone who phoned my father at his fur shop and arranged to come was a dining companion to the new President, who has down to south London with her husband, where she proved loyal and served this country well for many, managed to buy a very nice and expensive mink coat. many years and after being suitably ennobled was I do not believe my father overcharged her – well not by made a trade envoy, business relations between our much! two countries would be even further improved. 2016 was an exciting year for the United Kingdom. We LORD FARAGE OF FREEDOM rolls off the tongue have had the Brexit campaign, where friendship rather nicely!! counted for nothing, as politicians turned on each other, husbands and wives found a new virulent cause to Yours, disagree about over breakfast and journalists, economists and practically everyone lined up on either Andrew S Perloff side of the IN or OUT question. Much verbal and written Chairman venom was produced with lies, misinformation and deliberate obfuscation of facts. Worse of all, was the 25 April 2017 personal insults thrown wildly and vociferously against anyone who disagreed with the other’s point of view. In the United States of America they had similar experiences with their election for a new President. Foolishly, but not surprisingly, our own politicians, journalists, TV commentators had something to say about it, usually disparaging about their outsider but eventually successful contestant, Donald Trump. Panther Securities P.L.C. 10 Group Strategic Report About the Group Panther Securities PLC is a property investment company listed on the AIM market (AIM). Prior to 31 December 2013 the Company was fully listed and included in the FTSE fledgling index. It was first fully listed as a public company in 1934. The Group owns and manages over 800 individual property units within approximately 140 separately designated buildings over the mainland United Kingdom. The Group specialises in property investing and managing of good secondary retail, industrial units and offices, and also owns and manages many residential flats in several town centre locations. Strategic objective The primary objective of the Group is to maximise long- term returns for our shareholders by stable growth in net asset value and dividend per share, from a consistent and sustainable rental income stream. Progress indicators Progress will be measured mainly through financial results, the Board considers the business successful if it can increase shareholder return and asset value in the long-term, whilst keeping acceptable levels of risk by ensuring gearing covenants are well maintained. Key Ratios and measures 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 (Loss)/earnings per share – continuing Dividend per share Investment property acquisitions Investment property disposal proceeds 2016 75% 49% 2015 73% 48% 2014 66% 50% 2013 77% 51% 1.67 times 1.65 times 1.22 times 1.38 times 6.5% 6.6% 6.6% 6.7% 7.7% 407p (5.5)p 12.0p £5.0m £5.8m 7.5% 428p 38.7p 22p*** £2.2m £4.0m 7.5% 409p 26.1p 12.0p £3.2m £1.2m 7.9% 395p 42.0p 12.0p £5.3m £2.2m * 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 *** Includes 10p per share special dividend Business Review The Group turnover is up slightly due to increased rental income and higher trading turnover derived from MRG Systems Ltd (“MRG”). The combined cost of sales has also improved (reduced) showing better gross profits, the reduction in cost of sales mainly is due to not repeating all the demolition costs seen in 2015 on the Birmingham development. The income statement also income, but we had higher shows higher other administration costs which brought down our overall profit. The main difference in administration costs is a larger movement on the bad debt provision taken to the income statement, this increase relating entirely to Beale Ltd, a major tenant, who has struggled with financial difficulties. 11 Panther Securities P.L.C. Group Strategic Report continued The Group continued to benefit from improvement in the property market with the portfolio showing a small further increase of £0.3 million uplift (2015 – £3.9 million uplift) following the directors’ valuation. We also didn’t see the repeat of the prior year profits on disposals as some of this was reflected in prior year valuation. However the main difference between 2016 and 2015 was a large fair value loss of the derivative financial liabilities, our swap agreements, showing a loss of £5.3 million taken to the income statement (2015 we benefited from a £1.6m recovery or gain in our liability). The increased valuation loss on our derivative financial instruments is the main reason we did not have a very profitable year but it is worth pointing out that this is a non-cash movement. We are still in a position where the Group is more likely to be a seller than a purchaser, except in special situations (as we did with Lord Street Properties (Southport) Ltd – a corporate acquisition that took place in March 2016). There are still some uncertainties going forward which may affect property prices, but many of our properties are based outside London, and the values outside are still catching up. It is the Boards’ view that this market is less or even not “overheated”. As such, we still anticipate the market being stable or growing for our properties in the near term and that we have time to create or realise value, and continue to do so, in particular on our sites that are suitable for residential redevelopment. Financing The Group entered into a £75 million club loan facility (£60 million term and £15 million revolving), with HSBC and Santander, in July 2011, of which we had prior to the renewal paid back £2 million of the term element as scheduled repayments. These facilities were renewed and the loan was amended and restated on 19 April 2016 for a further 5 year term, providing the Group with an extra £2 million (term loan) which was redrawn. We also renewed the revolving facility part of the loan which Panther Securities P.L.C. 12 had £3.5 million undrawn, and currently has £5 million undrawn following a voluntary repayment in the year. This restated loan has the additional option of increasing it by a further £10 million (subject to the banks approval), so in total the refinancing gives the Group £15.0 million potential further funds to invest. At the statement of financial position date the Group had £4.9 million of cash funds. The Group has not offered the scrip dividend option for its latest dividends and has no plans for the current proposed dividend to provide shareholders with this option. Financial derivative We have seen a sizeable fair value loss (of a non-cash nature) in our long term liability on derivative financial instruments of £5.3 million (2015: £1.6 million fair value gain). Following this loss the total derivative financial liability on our Consolidated Statement of Financial Position is £28.3 million (2015: £22.9 million). 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. We have seen in uncertain economic times that 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. rates were significantly higher. These contracts were entered into in 2008 when long term interest 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 these financial instruments are compared to current market liability compared to the market shown on our Statement of Financial Position. rates, with the additional 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 and managing levels of debt finance and the related finance costs. The Company and Group also use interest rate swaps to protect against adverse interest rate movements with no hedge accounting applied. Mark-to-market valuations on our financial instruments have been erratic due to current low market interest rates and due to their long term nature. These large mark-to-market movements are shown within the income statement. However, the actual cash outlay effect is nil when considered alongside the term loan, as the instruments have been used to fix the risk of further cash outlays due to interest rate rises or can be considered as a method of locking in returns (difference between rent yield and interest paid at a fixed rate). Given the size of the Company and Group, the Directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the Board. The policies set by the Board of Directors are implemented by the Company and Group’s finance department. Credit risk The Company and Group have implemented policies that require appropriate credit checks on potential tenants before lettings are agreed. In many cases a deposit is requested unless the tenant can provide a strong personal or other guarantee. The amount of exposure to any individual counterparty is subject to a limit, which is reassessed annually by the Board. Exposure is reduced significantly due to the Group having a large spread of tenants who operate in different industries. Price risk The Company and Group are exposed to price risk due to normal inflationary increases in the purchase price of the goods and services it purchases in the UK. The 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. The exposure of the Company and Group to inflation is low due to the low cost base of the Group and natural hedge we have owning “real” assets. Price risk on income is protected by the rent review clauses contained within our tenancy agreements and often secured by medium or long term leases. Liquidity risk The Company and Group actively manage liquidity by maintaining a long-term finance facility, strong relationships with many banks and holding cash reserves. This ensures that the Company and Group have sufficient available funds for operations and planned expansion or the ability to arrange such. Interest rate risk The Company and Group have both interest bearing assets and interest bearing liabilities. Interest bearing assets consist of cash balances which earn interest at fixed rate when placed on deposit. The Company and Group have a policy of only borrowing debt to finance the purchase of cash generating assets (or assets with the potential to generate cash). The Directors revisit the appropriateness of this policy annually. 13 Panther Securities P.L.C. Group Strategic Report continued Other non-financial risks The Directors consider that the following are potentially material non-financial risks. Risk Impact Action taken to mitigate Reputation Raise capital/deal flow reduced Act honourably, invest well, be prudent. Regulatory changes Transactional and holding costs Seek high returns to cover additional costs. increase Lobby Government -“Ramblings”. People related issues Loss of key employees/low morale/inadequate skills Computer failure Loss of data, debtor history Maintain market level remuneration packages, flexible working and training. Strong succession planning and recruitment. Suitable working environment. External IT consultants, backups, offsite copies. Latest virus and internet software. Asset management Wrong asset mix, asset illiquidity Draw on wealth of experience to ensure balance between income producing and development opportunities. Continued spread of tenancies and geographical location. Manage the economic cycles. The Group Strategic Report set out on the above pages also includes the Chairman’s Statement shown earlier in these accounts and was approved and authorised for issue by the Board and signed on its behalf by: S. J. Peters Company Secretary Dated: 25 April 2017 Unicorn House Station Close Potters Bar Hertfordshire EN6 1TL Panther Securities P.L.C. 14 Directors’ Report Company number 00293147 The Directors submit their report together with the audited financial statements of the Company and of the Group for the year ended 31 December 2016. taking reasonable steps for detection of fraud and other irregularities. the prevention and 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 including FRS101 “Reduced Disclosure GAAP) Framework”. 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: (cid:1) select suitable accounting policies and then apply them consistently; (cid:1) make judgments and accounting estimates that are reasonable and prudent; (cid:1) 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 (cid:1) 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 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 Directors’ Report 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 has a diverse spread of tenants across most industries and investment properties based in many locations across the country. The Group has a long term loan in place. In 2015 this was shown as short-term, however this was renewed on 19 April 2016. The Group always maintains 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. 15 Panther Securities P.L.C. Directors’ Report continued 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 and dividend per share, from a consistent and sustainable rental income stream. 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: 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 loss for the year after taxation, amounted to £953,000 (2015: a profit of £6,813,000). The interim dividend of £532,000 (3.0p per share) on ordinary shares was paid on 29 November 2016. The Directors recommend a final dividend of £1,597,000 (9.0p per share) payable on 21 July 2017 to shareholders on the register at the close of business on 7 July 2017 (Ex dividend on 6 July 2017). The total dividend for the year ended 31 December 2016 being anticipated at 12p. There will be no option of a scrip dividend offered for the 2016 final dividend of 9p per share (to be paid in July 2017). There was no scrip option for the interim dividend in November. Ordinary shares of £0.25 each 2015 2016 A. S. Perloff (Chairman) B. R. Galan (Non – executive) P. M. Kellner (Non – executive) J. T. Doyle J. H. Perloff S. J. Peters 4,244,360 4,244,360 332,669 22,000 63,460 107,500 187,929 338,669 22,000 63,460 107,500 187,929 A. S. Perloff and his family trusts have beneficial interests in shares owned by Portnard Limited, a Company under their control, amounting to 8,405,175 (2015 – 8,405,175). have been There shareholdings since 31 December 2016. 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 £283,000 (2015 – £290,000) 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 Panther Securities P.L.C. Salary/ Fees £’000 Bonus £’000 Taxable Pension Benefit Contribution £’000 £’000 Total 2016 £’000 Total 2015 £’000 4 6 1 — — — 11 — — 25 — — 25 4 102 52 103 11 11 283 10 101 52 107 10 10 290 — 81 47 63 10 10 211 — 15 4 15 1 1 36 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 2016 and does not anticipate making further contributions. Events after the reporting date In March 2017 the group took a surrender premium for a lease in Maldon, receiving just under £2 million. This covered all the rent to the end of the lease and dilapidations. The lease had rent of £500,000 p.a. and ended on 11 August 2021. S. J. Peters had pension contributions paid in the year by the Company of £25,000 (2015 – £30,000) into his personal stakeholders’ contribution pension scheme. No other payments were paid in respect of any other Director during the year (2015 – £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 24. 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 29. 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 a £25,000 political donation to the UK Independence Party (2015 – £25,000). The Group makes donations to charities through advertisements at charity events and in the diaries of charities, the total of which in 2016 was £3,000 (2015 – £5,000). The Group is a Foundation Partner of the preferred charity of the property industry, Land Aid, donating £10,000 (2015 – £10,000). Status Panther Securities P.L.C. is a Company quoted on the and is Alternative incorporated in England and Wales. Investment Market (“AIM”) In April 2017 the Group sold its entire holding in William Nash PLC an unlisted property company, for £1,486,000 which was held at cost and shown at the yearend on the Consolidated Statement of Financial Position within “Available for sale investments” at a value of £627,000. Auditors In the case of each person who was a Director at the time this report was approved: (cid:1) so far as that Director was aware there was no relevant available information of which the Company’s auditors were unaware; and (cid:1) 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: 25 April 2017 Unicorn House Station Close Potters Bar Hertfordshire EN6 1TL 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 2016, Corporate Governance Code, issued by the Financial Reporting Council, 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. 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 of successful business and relevant 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 over 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 ten contested take-over bids and has also served on the Board of Directors of 6 other public listed companies. He is currently a non-executive director of Beale Ltd and Airsprung Furniture Ltd. Simon Peters (Finance Director) He is a member of the Chartered Institute of Taxation, a Fellow of the Chartered Certified Accountants and was formerly with KPMG LLP and the Lombard Bank Finance Department. He is currently a non-executive director of Beale Ltd and Airsprung Furniture Ltd. 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 2016 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 2016 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 comparables. 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 2016 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 Statement of Financial Position, the Parent Company Statement of Changes in Equity and related notes 1 to 48. 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 financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS101 “Reduced Disclosure Framework”. 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 2016 and of the Group’s loss 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 financial statements 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, based on the work undertaken in the course of the audit: (cid:1) (cid:1) 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 those financial statements; and the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report. 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 25 April 2017 21 Panther Securities P.L.C. Consolidated Income Statement For the year ended 31 December 2016 Revenue Cost of sales Gross profit Other income Administrative expenses Profit on disposal of investment properties Movement in fair value of investment properties Finance costs Investment income Loss (realised) on the disposal of available for sale investments (shares) Fair value (loss)/gain on derivative financial liabilities (Loss)/profit before income tax Income tax credit/(expense) (Loss)/profit for the year Attributable to: Equity holders of the parent Non-controlling interest (Loss)/profit for the year (Loss)/earnings per share Basic and diluted Notes 5 5 16 10 9 29 11 31 December 2016 £’000 31 December 2015 £’000 14,684 (3,643) 11,041 508 (3,947) 7,602 458 318 8,378 (5,097) 109 — (5,338) (1,948) 995 (953) (970) 17 (953) 14,443 (3,824) 10,619 294 (3,540) 7,373 1,074 3,859 12,306 (5,186) 31 (244) 1,563 8,470 (1,657) 6,813 6,815 (2) 6,813 14 (5.5)p 38.7p Panther Securities P.L.C. 22 Consolidated Statement of Comprehensive Income For the year ended 31 December 2016 (Loss)/profit for the year Other comprehensive income 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 income for the year, net of tax Total comprehensive (loss)/income for the year Attributable to: Equity holders of the parent Non-controlling interest 31 December 2016 £’000 31 December 2015 £’000 Notes (953) 6,813 19 27 87 (15) 72 (881) (898) 17 (881) 45 (8) 37 6,850 6,852 (2) 6,850 23 Panther Securities P.L.C. Consolidated Statement of Financial Position Company number 00293147 As at 31 December 2016 ASSETS Non-current assets Plant and equipment Investment property Deferred tax asset Available for sale investments (shares) Current assets Inventories Stock properties Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Capital and reserves Share capital Share premium account Capital redemption reserve Retained earnings Attributable to equity holders of the parent Non-controlling interest Total equity Non-current liabilities Long-term borrowings Derivative financial liability Deferred tax liabilities Obligations under finance leases Current liabilities Trade and other payables Short-term borrowings Current tax payable Total liabilities Total equity and liabilities 31 December 2016 £’000 31 December 2015 £’000 Notes 15 16 27 19 20 22 24 25 25 26 29 27 32 28 26 63 176,489 1,140 908 178,600 57 736 4,020 4,887 9,700 188,300 4,437 5,491 604 61,747 72,279 96 72,375 69,769 28,250 — 6,769 104,788 10,721 150 266 11,137 115,925 188,300 145 176,133 — 736 177,014 60 991 4,553 4,387 9,991 187,005 4,437 5,491 604 65,485 76,017 80 76,097 591 22,912 100 6,640 30,243 10,663 69,637 365 80,665 110,908 187,005 The accounts were approved by the Board of Directors and authorised for issue on 25 April 2017. They were signed on its behalf by: A.S. Perloff Chairman Panther Securities P.L.C. 24 Consolidated Statement of Changes in Equity For the year ended 31 December 2016 Balance at 1 January 2015 Total comprehensive income Dividends Share capital £’000 4,372 — 65 Share Capital premium redemption £’000 £’000 Retained earnings £’000 Total £’000 4,692 604 61,804 71,472 — 799 — — 6,852 6,852 (3,171) (2,307) Balance at 1 January 2016 4,437 5,491 604 65,485 76,017 Total comprehensive income Dividends — — — — — — (898) (898) (2,840) (2,840) Balance at 31 December 2016 4,437 5,491 604 61,747 72,279 Within retained earnings are unrealised loss of £10,000 and deferred tax credit of £2,000 (2015 – unrealised losses of £97,000 and a deferred tax credit of £17,000) 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 2016 Cash flows from operating activities Profit from operating activities Depreciation charges for the year Rent paid treated as interest Profit before working capital change Increase in inventory Increase in receivables Increase/(decrease) in payables Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities Cash flows from investing activities Purchase of plant and equipment Purchase of investment properties Purchase of available for sale investments (shares) Corporate acquisition (net of cash received) Proceeds from sale of investment property Proceeds from sale of available for sale investments (shares) Dividend income received Interest income received Net cash generated from investing activities Cash flows from financing activities Repayments of loans Loan arrangement fees and associated costs Draw down of loan Dividends paid Net cash used in financing activities Net increase/(decrease) 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 2016 £’000 31 December 2015 £’000 7,602 90 (514) 7,178 3 617 (432) 7,366 (4,342) (360) 2,664 (8) (539) (85) (4,497) 5,793 — 103 6 773 (1,655) (442) 2,000 (2,840) (2,937) 500 4,387 4,887 7,373 135 (520) 6,988 5 292 (1,139) 6,146 (4,572) (95) 1,479 (38) (2,224) — — 4,019 244 23 8 2,032 (3,152) — 1,000 (2,307) (4,459) (948) 5,335 4,387 * Of this balance £1,017,000 (2015: £1,110,000) 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 2016 1. 2. 3. 4. General information Panther Securities P.L.C. (the Company) is a Public Limited Company incorporated in England and Wales. 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 Director’s Report. 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 2017 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 2016) will have a material effect on the consolidated financial statements of the Group, however the extent of this has not yet been assessed. (cid:1) (cid:1) (cid:1) (cid:1) IFRS 9 Financial Instruments* IFRS 15 Revenue for Contracts with Customers* IFRS 16 Leases* Amendments to IAS 7 Statement of Cash Flows: Disclosure* * Not yet endorsed by the EU The Parent Company and subsidiaries have not adopted IFRS in their individual accounts. Critical accounting judgements and key sources of estimation uncertainty Estimation uncertainty Sources of estimation uncertainty are noted in the accounting policies for Investment Properties and fair value of Derivative Financial Instruments. Significant accounting policies The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards adopted for use in the European Union. 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. 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. 27 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 4. Significant accounting policies continued 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. Business combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition are recognised at their fair values at the acquisition date. 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. 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. 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. Panther Securities P.L.C. 28 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 statement of financial position 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 20.00% (2015 – 20.25%), 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 is 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. 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. Revenue recognition Revenue comprises: (cid:1) (cid:1) (cid:1) 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. Revenue in respect of MRG Systems Limited is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably. 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. 29 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 4. Significant accounting policies continued 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, it 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. 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 treatment of 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. Panther Securities P.L.C. 30 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. Where new bank financing is obtained on substantially different terms to the existing financing the original financial liability is derecognised and a new financial liability recognised. 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. 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 different 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. 31 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 4. Significant accounting policies continued 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. Share capital Share capital represents the nominal value of shares issued by the Company. Share premium Share premium represents amounts received in excess of nominal value on the issue of share capital. Capital redemption reserve The capital redemption reserve arises on the purchase of the Company’s own shares for cancellation. Retained earnings Retained earnings represent the accumulated comprehensive income and losses of the Group less dividends paid. Dividends Dividends are recognised based on the value per share declared. Where scrip dividends are issued, the value of such shares, measured as the amount of the cash dividend alternative, is credited to share capital and share premium. The net movement in equity represents the cash paid on the dividend. Panther Securities P.L.C. 32 5. Revenue and cost of sales The Group’s main 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. MRG Systems Limited is an operating segment whose principal activity is that of electronic designers, engineers and consultants. 67% of its revenues arose in the United Kingdom and 100% of its cost of sales. The split of assets, tax effect and cash flow of each segment is not shown as these are not material in relation to MRG Systems Limited. Turnover arose as follows: Rental income Income from trading (MRG Systems Limited) Cost of sales arose as follows: Cost of sales from rental income Cost of sales from trading (MRG Systems Limited) (Loss)/profit before income tax: (Loss)/profit from investment and dealing in properties Profit/(loss) from trading (MRG Systems Limited) 2016 £’000 12,983 1,701 14,684 2016 £’000 3,066 577 3,643 2016 £’000 (2,014) 66 (1,948) 2015 £’000 12,840 1,603 14,443 2015 £’000 3,272 552 3,824 2015 £’000 8,480 (10) 8,470 33 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 6. Profit for the year The profit 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 8. Directors remuneration Emoluments for services as Directors 2016 £’000 90 3 75 8 2016 £’000 1,444 159 49 1,652 6 30 36 2016 £’000 283 2015 £’000 Restated 135 3 69 13 2015 £’000 Restated 1,468 156 52 1,676 6 31 37 2015 £’000 290 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. 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 above. Panther Securities P.L.C. 34 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: Emoluments for services as directors Employees NI 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* 2016 £’000 283 22 305 2016 £’000 6 103 109 2016 £’000 4,583 514 5,097 2015 £’000 290 20 310 2015 £’000 Restated 8 23 31 2015 £’000 Restated 4,666 520 5,186 * Investment properties held under operating leases have been treated as being held under finance leases in accordance with IAS 40. 11. Income tax charge 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 2016 £’000 448 (188) 260 (1,255) (995) 2015 £’000 441 (91) 350 1,307 1,657 Domestic income tax is calculated at 20.00% (2015 – 20.25%) of the estimated assessable profit or loss for the year. The future provision for deferred tax has been calculated on the basis of 17.0% (2015 – 18.0%). 35 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 11. Income tax charge continued The total charge for the year can be reconciled to the accounting profit or loss as follows; (Loss)/profit before taxation (Loss)/profit on ordinary activities before tax multiplied by the average of the standard rate of 2016 £’000 (1,948) 2016 % 2015 £’000 8,470 2015 % UK corporation tax of 20.00% (2015 – 20.25%) (390) 20.0 1,716 20.25 Tax effect of expenses that are not deductible in determining taxable profit Dividend income not allowable for tax purposes Changes in tax rates Losses brought forward Disposal of properties or shares Prior year corporation tax over provision Tax (credit)/charge 25 (21) (292) (353) 224 (188) (995) (1.3) 1.1 14.9 18.1 (11.5) 9.7 34 (5) (320) — 323 (91) 1,657 12. Loss or profit 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 30. 13. Dividends Amounts recognised as distributions to equity holders in the period: Special dividend for the year ended 31 December 2015 of 10p per share Final dividend for the year ended 31 December 2015 of 3p per share (2014: 9p per share) Interim dividend for the year ended 31 December 2016 of 3p per share (2015: 9p per share) 2016 £’000 (10,374) 9,421 (953) 2016 £’000 1,776 532 532 2,840 0.4 (0.1) (3.7) — 3.8 (1.1) 2015 £’000 (5,158) 11,971 6,813 2015 £’000 — 1,574 1,597 3,171 Panther Securities P.L.C. 36 The Directors recommend a payment of a final dividend, for the year ended 31 December 2016 of 9p per share (2015 – 3p), following the interim dividend paid on 29 November 2016 of 3p per share. The final dividend of 9p per share will be payable on 21 July 2017 to shareholders on the register at the close of business on 7 July 2017 (Ex dividend on 6 July 2017). The full ordinary dividend for the year ended 31 December 2016 is anticipated to be 12p per share, being the 3p interim per share paid and the 9p per share proposed. 14. (Loss)/earnings per ordinary share (basic and diluted) The calculation of loss per ordinary share is based on the loss, after excluding non-controlling interests, being a loss of £970,000 (2015 – a profit of £6,815,000) and on 17,746,929 ordinary shares being the weighted average number of ordinary shares in issue during the year (2015 – 17,617,112). There are no potential ordinary shares in existence. 15. Plant and equipment Fixtures and Equipment £’000 Motor Vehicles £’000 Total £’000 Cost At 1 January 2015 Transfer from assets classified as held for sale Additions At 1 January 2016 Additions At 31 December 2016 Accumulated depreciation At 1 January 2015 Transfer from assets classified as held for sale Depreciation charge for the year At 1 January 2016 Depreciation charge for the year At 31 December 2016 Carrying amount At 31 December 2016 At 31 December 2015 At 1 January 2015 650 199 38 887 8 895 465 142 135 742 90 832 63 145 185 8 — — 8 — 8 8 — — 8 — 8 — — — 658 199 38 895 8 903 473 142 135 750 90 840 63 145 185 37 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 16. Investment properties Fair value At 1 January 2015 Additions Disposals Fair value adjustment on property held on operating leases Revaluation increase At 1 January 2016 Additions Acquisition of subsidiary Disposals Transferred from stock properties Fair value adjustment on property held on operating leases Revaluation increase At 31 December 2016 Carrying amount At 31 December 2016 At 31 December 2015 Investment Properties £’000 173,412 2,224 (2,945) (417) 3,859 176,133 539 4,462 (5,335) 255 117 318 176,489 176,489 176,133 At 31 December 2016, £136,433,000 (2015 – £136,689,000) and £40,056,000 (2015 – £39,444,000) 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 2016 £’000 121,908 2015 £’000 115,998 The Group has pledged £168,219,000 of investment property (2015 – £164,331,000) as security for the loan facilities granted to the Group at the Statement of Financial Position date. Costs relating to ongoing and potential developments are included in additions to investment properties and in the year ended 31 December 2016 amounted to £nil (2015 – £180,000). Panther Securities P.L.C. 38 The property rental income earned by the Group from its investment property, all of which is leased out under operating leases, amounted to £12,762,000 (2015 – £12,593,000). Property valuations are complex, require a degree of judgement and are based on data some of which is publicly available and some that is not. Consistent with EPRA guidance, we have classified the valuations of our property portfolio as level 3 as defined by IFRS 13 Fair Value Measurement. Level 3 means that the valuation model cannot rely on inputs that are directly available from an active market; however there are related inputs from auction results that can be used as a basis. These inputs are analysed by segment in relation to the property portfolio. All other factors remaining constant, an increase in rental income would increase valuation, whilst an increase in equivalent nominal yield would result in a fall in value and vice versa. In establishing fair value the most significant unobservable input is considered to be the appropriate yield to apply to the rental income. This is based on a number of factors including financial covenant strength of the tenant, location, marketability of the unit if it were to become vacant, quality of property and potential alternative uses. Yields applied across the core portfolio are in the range of 6.5% – 11.0% with the average yield being 8.0%. Assuming all else stayed the same; a decrease of 1.0% in the average yield would result in an increase in fair value of £22,789,000 (2015: £22,488,000). An increase of 1.0% in the average yield would result in a corresponding decrease in fair value. The property valuations were carried out by the directors at 31 December 2016 (independently by GL Hearn at 31 December 2015). The property valuations were carried out internally by the Directors with two being members of the Royal Institution of Chartered Surveyors (RICS). The valuation methodology by GL Hearn and the directors were both 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 2016 this was a fair value gain of £318,000 (2015 – fair value gain of £3,859,000). The amount of realised gains or losses is shown as the profit/(loss) on disposal of investment properties within the income statement, for 2016 there was a realised gain of £458,000 (2015 – £1,074,000). 39 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 17. Subsidiaries Details of the Company’s subsidiaries at 31 December 2016 are as follows; Name of subsidiary Panther Trading Limited Panther (Dover) Limited Panther Developments Limited Panther Shop Investments Limited Panther Shop Investments (Midlands) Limited Panther Investment Properties Limited Panther (Bromley) Limited (***) Snowbest Limited Surrey Motors Limited Westmead Building Company Limited Multitrust Property Investments Limited Country of incorporation and operation Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Activity Property Property Property Property Property Property Property Property Property Property Property Etonbrook Properties PLC Great Britain Non-trading Northstar Property Investment Limited Panther (VAT) Properties Limited Northstar Land Limited London Property Company PLC Eurocity Properties PLC Eurocity Properties (Central) Limited (**) CJV Properties Limited (**) MRG Systems Limited Panther AL Limited Panther AL (VAT) Limited Melodybright Limited TRS Developments Limited Abbey Mills Properties Limited Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Great Britain Lord Street Properties (Southport) Limited Great Britain ** – 100% subsidiaries of Eurocity Properties PLC *** – 100% subsidiary of Surrey Motors Limited Property Property Property Dormant Property Property Property Trading Property Property Property Property Property Property Proportion of Proportion of voting power held % ownership interest % 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 99.99 99.99 All companies have a 31 December year end and have been included in the consolidated financial statements. The registered office of all the above companies (apart from MRG Systems Limited) is Unicorn House, Station Close, Potters Bar, Herts., EN6 1TL. The registered office of MRG Systems Limited is The Mill, Upper Mills Estate, Bristol Road, Stonehouse, Gloucester, GL10 2BJ. Panther Securities P.L.C. 40 18. Acquisition of Lord Street Properties (Southport) Limited On 6 March 2016 Panther Securities Plc acquired 99.99% of the ordinary share capital of Lord Street Properties (Southport) Limited (“Lord Street”) for cash consideration of £4,554,000, including acquisition costs. No minority interest has been recognised on the acquisition as it is considered immaterial to the Consolidated Financial Statements. Lord Street Properties (Southport) Ltd was established to own and operate Broadbents Department Store, it subsequently acquired Wayfarers Arcade. The principal activity of Lord Street Properties (Southport) Limited is property investment and management. The Group acquired Lord Street in order to acquire its property portfolio. The fair value of the assets and liabilities of Lord Street at the acquisition date are as follows: Investment property Property plant and equipment Trade and other receivables Cash and cash equivalents Trade and other payables Book value £’000 4,300 57 84 56 (48) Fair value £’000 4,462 — 84 56 (48) 4,449 4,554 The following amounts have been included in the Consolidated Statement of Comprehensive Income since the Acquisition Date: Revenue Profit for the year Total £’000 447 528 If the Group had acquired Lord Street on 1 January 2016 and controlled it for the entire year the consolidated revenue of the Group for the year ended 31 December 2016 would have been £14,781,000 and the consolidated loss of the Group would have been £970,000. 41 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 19. Available for sale investments (shares) Cost or valuation At 1 January 2015 Movement in fair value of available for sale investments (shares) taken to equity Disposal At 1 January 2016 Reversal of impairment on revaluation through reserves Additions At 31 December 2016 Comprising at 31 December 2016: At cost At valuation/net realisable value Carrying amount At 31 December 2016 At 31 December 2015 Non-current assets £’000 1,179 45 (488) 736 87 85 908 627 281 908 736 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. Price risk For the year ended 31 December 2016 if the average share price of the portfolio was 10% lower, then the gain recognised in other comprehensive income would have been £28,000 lower (2015: £19,000 lower). Corresponding gains would be seen for a 10% uplift. Panther Securities P.L.C. 42 20. Stock properties Stock properties 2016 £’000 736 2015 £’000 991 The cost of stock properties recognised as expense and included in cost of sales amounted to £nil (2015 – £nil). Impairments of £nil have been recognised against stock properties (2015 – £nil). The market value of stock properties is £1,435,000 (2015 – £1,910,000). £1,335,000 (2015: £1,810,000) of stock properties at market value have been provided as security for the bank loan from HSBC and Santander referred to in note 26. The market value shown as at 31 December 2016 was undertaken by the Directors (31 December 2015 was valued independently by GL Hearn). 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. 21. Capital commitments Capital expenditure that has been contracted for but has not been provided for in the accounts The above relates to building works. 2016 £’000 100 2015 £’000 105 43 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 22. Trade and other receivables Trade receivables Bad debt provision Other receivables Prepayments and accrued income 2016 £’000 4,456 (1,538) 2,918 100 1,002 4,020 2015 £’000 3,787 (985) 2,802 28 1,723 4,553 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 £8,597,000 (2015 – £8,553,000) (which relates to £3,710,000 (2015 – £4,166,000) included in the above (less prepayments) 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. Movement in allowance for doubtful debts on trade receivables and cash and cash equivalents: Balance at 1 January 2015 Amount written off as uncollectable Charge to income statement Balance at 1 January 2016 Amounts written off as uncollectable Charge/(credit) to income statement Balances at 31 December 2016 Trade receivables £’000 Accrued income £’000 Cash and cash equivalents £’000 Total bad debt provisions £’000 2,368 (1,774) 391 985 (264) 817 1,538 — (595) 595 — — 571 571 58 — — 58 — (6) 52 2,426 (2,369) 986 1,043 (264) 1,382 2,161 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 84.25p in the pound from an original balance of £332,000. 23. 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 financial assets are cash and cash equivalents and trade and other receivables. 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 all of its balances are provided against (see note 22). Further information on the Group’s credit risk is detailed within the Group Strategic Report. Panther Securities P.L.C. 44 24. Share capital Allotted, called up and fully paid 17,746,929 (2015 – 17,746,929) ordinary shares of £0.25 each 2016 £’000 4,437 2015 £’000 4,437 The Company has one class of ordinary shares which carry no fixed right to income. During 2016 no ordinary shares were issued in the period (2015 – 259,634 ordinary shares were issued as a consequence of the scrip dividend). 25. Capital reserves Share premium account At 31 December Capital redemption reserve At 31 December 26. Bank loans Bank loans due within one year (within current liabilities) 2016 £’000 5,491 604 2016 £’000 150 2015 £’000 5,491 604 2015 £’000 69,637 Bank loans due within more than one year 69,769 591 (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 69,919 70,228 2016 £’000 Capital 6,858 150 150 2016 £’000 Total 6,858 1,771 1,771 70,273 74,030 — — 2015 £’000 Total 5,676 70,741 154 462 34 70,573 77,572 77,067 2016 £’000 Interest* — 1,621 1,621 3,757 — 6,999 * ** based on the year end 3 month LIBOR floating rate – 0.35%, and bank rate of 0.25% Trade creditors, other creditors and accruals On 19 April 2016 the Group renewed its £75,000,000 loan facility by entering into a new 5 year term loan with HSBC and Santander. The Group has the option to draw down an additional £10,000,000 under the same agreement subject to the banks credit approval process. The Natwest bank loan was £576,000 at the year end and is repayable over its life to September 2022 (but is likely to be paid sooner due repayments not being adjusted to take account of historically low interest rates). 45 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 26. Bank loans continued 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. 27. 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 2015 Credit to equity for the year Credit to profit and loss for the year Liability at 1 January 2016 Debit to equity for the year Credit to profit and loss for the year Asset at 31 December 2016 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 (liability)/asset Total £’000 1,215 (8) (1,307) (100) (15) 1,255 1,140 2016 £’000 2015 £’000 (3,958) (4,588) 293 2 4,803 1,140 347 17 4,124 (100) 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 2016 the substantively enacted rate was 17% (2015: 18%) and this has been used for the deferred tax calculation. Panther Securities P.L.C. 46 28. Trade and other payables Trade creditors Social security and other taxes Other creditors Obligations under finance leases (see note 32) Accruals and deferred income 2016 £’000 4,641 610 1,004 514 3,952 10,721 2015 £’000 3,855 665 872 520 4,751 10,663 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 £84,670,000 (2015 – £83,730,000) (includes payables above and the long term and short term borrowings, excluding deferred income). 29. 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. 2016 Rate 7.01% 6.58% 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 2016 £’000 35,000 25,000 (654) 9,997 576 69,919 2015 £’000 35,000 25,000 — 9,497 731 70,228 2015 Rate 7.06% 6.63% Bank loans totalling £60,000,000 (2015 – £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. 47 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 29. Derivative financial instruments continued 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’ 21.69 4.92 Average rate 5.06% 4.63% 2016 Fair value £’000 2015 Fair value £’000 (23,610) (18,541) (4,640) (4,371) (28,250) (22,912) (5,338) 1,563 * Fixed rate came into effect on 1 September 2008. Rate includes 1.95% 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 1.95% 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 2016, 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 £104,000 lower (2015: £102,000 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. Panther Securities P.L.C. 48 30. Parent company profit and loss account As permitted under Section 408 of the Companies Act 2006, no Income Statement or Statement of Comprehensive Income is presented for the parent company. Reconciliation of parent company profit and loss (Loss)/profit of parent company before intercompany adjustments Increase in write off of intercompany debt (removed on consolidation) Intercompany dividends (removed on consolidation) Loss attributable to members of the Parent undertaking as per note 12 31. Contingent liabilities There were no contingent liabilities at the year end. 2016 £’000 (2,670) — (7,704) (10,374) 2015 £’000 1,349 359 (6,866) (5,158) 32. Operating lease arrangements and obligations under finance leases The Group as lessee The Group paid rent under non-cancellable operating leases in the year of £686,000 (2015 – £779,000). 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 151 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 £686,000 (2015: £779,000) and the minimum for the year of £514,000 (2015: £520,000) 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 Anticipated rental income derived under non-cancellable sub leases (Lessor) Payable within one year Payable between one year and five years Payable in more than five years 2016 £’000 514 2,056 40,088 42,658 2016 £’000 3,042 12,168 228,406 243,616 2015 £’000 520 2,080 40,547 43,147 2015 £’000 3,002 12,008 228,820 243,830 49 Panther Securities P.L.C. Notes to the Consolidated Accounts continued For the year ended 31 December 2016 32. Operating lease arrangements and obligations under finance leases continued 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 2016 £’000 514 2,056 4,713 6,769 7,283 2015 £’000 520 2,080 4,560 6,640 7,160 The Group as a lessor The Group rents out its investment properties under operating leases. Rental income for the Group is disclosed in Note 5. Contracted rental income derived under non-cancellable operating leases on investment properties 2015 £’000 2016 £’000 Payable within one year Payable between one year and five years Payable in more than five years 10,839 34,591 47,494 92,924 10,950 33,467 51,011 95,428 33. Events after the reporting date In March 2017 the Group took a surrender premium for a lease in Maldon, receiving just under £2 million. This covered all rent to the end of the lease and dilapidations. The lease had rent of £500,000 p.a. and ended on 11 August 2021. In April 2017 the Group sold its entire holding in William Nash PLC, an unlisted property company, for £1,486,000, which was held at cost and shown at the yearend on the Consolidated Statement of Financial Position within “Available for sale investments” at a value of £627,000. Panther Securities P.L.C. 50 34. Related party transactions Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. The compensation of the Group’s key management personnel is shown in note 8 to the financial statements and Directors’ emoluments are shown in note 8 and the Directors’ Report. Included within the financial statements is £761,000 (2015: £780,000) of rental income in respect of Beale Ltd, a company which has some common directors to the Group. Of this balance £684,000 (2015: £514,000) is outstanding and included within trade receivables. We have made a bad debt provision on this debtor and therefore the net balance showing as receivable at the year-end is £233,000 (2015: 514,000). Included within the revenue recognised to date from Beale Ltd is £nil (2015: £571,000) of accrued income in respect of rent free periods. We have provided against £571,000 of previously accrued income in respect of rent free period in 2016. In 2015 £595,000 was written off, being the amount of rent accrued previously in respect of rent frees for stores compromised by Beale’s landlord only Creditors Voluntary Arrangement. At 31 December 2016 included within creditors was, £nil (2015: £96,300) payable to G Perloff, £101,000 (2015: £7,000) payable to Harold Perloff, both close family members of a director. At 31 December 2016 included within creditors was, £76,000 (2015: £25,000) owed to Maland Pension Fund a company sponsored pension scheme (for a director). This is a trading relationship as the balance owed was in relation to a jointly managed property were the interests were split and have been for many years. No contributions have been made by the company for over a decade and there are no plans to make any further contributions. 35. Approval of financial statements The financial statements were approved by the Board of Directors and authorised for issue on 25 April 2017. 51 Panther Securities P.L.C. Parent Company Statement of Financial Position Company number 00293147 As at 31 December 2016 Notes £’000 2016 £’000 £’000 2015 £’000 Fixed assets Investments Current assets Debtors Cash at bank and in hand 38 39 97,762 3,942 101,704 Creditors: amounts falling due within one year 40 (10,005) Net current assets Total assets less current liabilities Creditors: amounts falling due after more 41 29 43 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 25,342 16,031 108,348 3,437 111,785 (80,018) 91,699 117,041 (69,343) (28,250) 19,448 4,437 5,491 604 8,916 19,448 31,767 47,798 — (22,912) 24,886 4,437 5,491 604 14,354 24,886 The Parent Company made a loss for the year of £2,670,000 (2015: profit of £1,349,000). The accounts were approved by the Board of Directors and authorised for issue on 25 April 2017. They were signed on its behalf by: A.S. Perloff Chairman Panther Securities P.L.C. 52 Parent Company Statement of Changes in Equity As at 31 December 2016 Share Capital premium redemption £’000 £’000 Balance at 1 January 2015 Profit for the year 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 Dividends Share capital £’000 4,372 — — — 65 4,692 — — — 799 Balance at 1 January 2016 4,437 5,491 Loss for the year 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 Dividends — — — — — — — — Balance at 31 December 2016 4,437 5,491 Retained earnings £’000 Total £’000 16,139 25,807 1,349 1,349 45 45 (8) (8) (3,171) (2,307) 14,354 24,886 (2,670) (2,670) 87 87 (15) (15) (2,840) (2,840) 8,916 19,448 604 — — — — 604 — — — — 604 Within retained earnings are unrealised losses of £10,000 and deferred tax credit of £2,000, (2015 – unrealised losses of £97,000 and a deferred tax credit of £17,000) relating to fair value of available for sale investments (shares). 53 Panther Securities P.L.C. Notes to the Parent Company Accounts For the year ended 31 December 2016 36. Accounting policies for the Parent Company The Parent Company financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework. Basis of preparation of financial statements The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 December 2016. The company has taken advantage of the following disclosure exemptions under FRS 101: (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) the exemption from providing certain comparative information; the exemption from preparing a statement of cash flows; the exemption from declaring compliance with IFRS; the exemption from disclosing aspects of capital risk management; the exemption from providing a reconciliation on the number of shares outstanding; the exemption from disclosing information about IFRS in issue but not yet adopted; the exemption from disclosing key management personnel compensation; and the exemption from disclosing transactions between wholly owned group members. In relation to the following exemptions equivalent disclosures have been given in the consolidated financial statements: (cid:1) (cid:1) (cid:1) the exemption from certain financial instrument disclosures; the exemption from certain fair value disclosures; and the exemption from certain asset impairment disclosures. Critical accounting judgements and key sources of estimation uncertainty The preparation of to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the Statement of Financial Position date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. financial statements requires management Judgements and key sources of estimation uncertainty of the Group, applicable to the consolidated financial statements have been disclosed in note 4 to the consolidated financial statements. There are no additional judgements and key sources of estimation uncertainty that are applicable to the company only. Significant accounting policies The accounting policies of the Parent Company are identical to those adopted in the Consolidated Financial Statements of the Group, where applicable, with the exception of revenue recognition and the addition of investments. Revenue recognition Turnover comprises dividend income from investments recognised when the Company’s rights to receive payment have been established. Investments Investments in subsidiaries undertakings are stated at cost less any provisions for impairment. Panther Securities P.L.C. 54 37. 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 38. Fixed asset investments 2016 £’000 705 72 25 802 6 15 21 Cost or valuation At 1 January 2016 Movement in fair value of available for sale investments (shares) taken to equity Additions At 31 December 2016 Investments: Listed Unlisted Shares in Group undertakings £’000 Other investments £’000 15,295 — 9,139 24,434 — 24,434 24,434 736 87 85 908 281 627 908 2015 £’000 721 75 30 826 6 15 21 Total £’000 16,031 87 9,224 25,342 281 25,061 25,342 The above investments are shown at market value where there is an active market for these shares. The historic cost of listed investments is £291,000 (2015: £291,000). For details of the Company’s subsidiaries at 31 December 2016, see note 17. 55 Panther Securities P.L.C. Notes to the Parent Company Accounts continued For the year ended 31 December 2016 39. Debtors Due less than one year: Trade debtors Corporation tax Amounts owed by Group undertakings Other debtors Prepayments and accrued income Due more than one year: Deferred tax (note 42) 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 2016 £’000 106 182 92,647 — 22 4,805 97,762 2016 £’000 197 8,816 — 52 167 773 2015 £’000 26 75 104,060 27 20 4,140 108,348 2015 £’000 188 9,712 69,497 70 90 461 41. Creditors: Amounts falling due after more than one year Bank loans 10,005 80,018 2016 £’000 69,343 2015 £’000 — The bank loan is secured by first fixed charges on the properties held within the Group and floating charge over all the assets of the Company. The lenders have also taken fixed security over the shares held in the group undertakings. 42. Deferred taxation The following potential deferred taxation asset is recognised: Potential capital losses Fair value of financial instruments 2016 £’000 2 4,803 4,805 2015 £’000 16 4,124 4,140 Panther Securities P.L.C. 56 43. Called up share capital Authorised 30,000,000 ordinary shares of £0.25 each Allotted, called up and fully paid 17,746,929 (2015: 17,746,929) ordinary shares of £0.25 each 2016 £’000 7,500 4,437 2015 £’000 7,500 4,437 The Company is limited by shares and has one class of ordinary shares which carry no right to fixed income. During 2016, no ordinary shares were issued in the period (2015: 259,634 ordinary shares were issued as a consequence of the scrip dividend). 44. Other commitments At 31 December 2016 the Company had total commitments under non-cancellable operating leases as follows: Expiry date: Less than one year 45. Related party transactions Land and buildings 2016 £’000 11 2015 £’000 11 The compensation of the Company’s key management personnel is shown in note 8 to the financial statements and Directors’ emoluments are shown in note 8 and the Directors’ Report. At 31 December 2016 included within creditors was, £nil (2015: £96,300) payable to G Perloff, £101,000 (2015: £7,000) payable to Harold Perloff, both close family members of a director. At 31 December 2016 included within creditors was, £76,000 (2015: £25,000) owed to Maland Pension Fund a company sponsored pension scheme (for a director). This is a trading relationship as the balance owed was in relation to a jointly managed property were the interests were split and have been for many years. No contributions have been made by the company for over a decade and there are no plans to make any further contributions. There were no further related party transactions during the period other than dividends paid to directors who hold ordinary shares in the Company. 46. Risk management For information on the Company’s risk management please refer to the Group Strategic Report section of the Group accounts. 47. Events after the reporting period date In April 2017 the Company sold its entire holding in William Nash PLC, an unlisted property company, for £1,486,000, which was held at cost and shown at the yearend on the Parent Statement of Financial Position within Investments at a value of £627,000. There were no other material events after the reporting date. 57 Panther Securities P.L.C. Notes to the Parent Company Accounts continued For the year ended 31 December 2016 48. Authorisation of financial statements and statement of compliance with FRS101 The financial statements of Panther Securities PLC (the “Company”) for the year ended 31 December 2016 were authorised for issue by the Board of Directors on 25 April 2017 and the balance sheet was signed on the board’s behalf by A S Perloff. Panther Securities PLC is incorporated and domiciled in England and Wales. These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards. The Company’s financial statements are presented in Sterling and all values are rounded to the nearest (£000’s) except when otherwise indicated. The results of Panther Securities PLC are included within the consolidated financial statements of Panther Securities PLC. The principal accounting policies adopted by the Company are set out in note 36. Panther Securities P.L.C. 58 Notice of Annual General Meeting Notice is hereby given that the 83rd 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 2017 at 11.30 a.m. for the following purposes:- As Ordinary Business 1. To receive and adopt the Group Strategic Report, Directors’ Report and Financial Statements for the year ended 31 December 2016 contained in the document entitled “Annual Report and Financial Statements 2016”. 2. 3. 4. 5. To authorise the payment of a final dividend of 9.0p per ordinary share. To re-elect S. J. Peters who is retiring by rotation, as a Director. To re-elect J. T. Doyle 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 2017 (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 £221,836; 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 2017 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 £20,000 by way of donation to the UK Independence Party. The directors believe that the proposals in resolutions 1-8 are in the best interests of shareholders as a whole and they unanimously recommend that you vote in favour of these resolutions. In respect of resolution 9 the board makes no recommendation. By order of the Board S. J. Peters Company Secretary Registered Office Unicorn House Station Close Potters Bar Hertfordshire EN6 1TL Dated: 25 April 2017 Panther Securities P.L.C. 60 Notes 1. 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. 2. 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. 3. 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. 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 4. 5. 6. 7. 8. 61 Panther Securities P.L.C. Notice of Annual General Meeting continued shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else 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 close of business on 15 June 2017 or, if the meeting is adjourned, in the register of members at close of business 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 close of business on 15 June 2017, or, if the meeting is adjourned, in the register of members at close of business 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 25 April 2017, the Company’s issued share capital comprised 17,746,929 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 25 April 2017 is 17,746,929. 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 2017 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 31 December 2016. 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 2016”. Resolutions 3 and 4 – Re-election of directors In accordance with the Articles of Association of the Company Simon Peters and John Doyle 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 25 April 2017 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 £221,836 (representing approximately 5% of the Company’s issued ordinary share capital as at 25 April 2017, 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 25 April 2017, 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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Unicorn House Station Close Potters Bar Hertfordshire EN6 1TL www.pantherplc.com ANNUAL REPORT & FINANCIAL STATEMENTS 2016 Company number (cid:17)(cid:17)293147 PANTHER-AR-COVER-FINAL.indd All Pages 07/05/2014 16:57