Panther Securities : Year-end Announcement 31 December 2021

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

Panther Securities P.L.C. ("the Company" or "the Group")

Final results for the year ended 31 December 2021

CHAIRMAN'S STATEMENT

I am pleased to present the results for the year ended 31 December 2021 which shows a profit of £15,922,000 before tax compared to a profit of £2,573,000 before tax for the previous year ended 31 December 2020.

Of course, once again the figures are substantially affected by the movement in our swap liabilities amounting to a reduction of £16,754,000. A large part of the improvement being due to the market expectation of future higher interest rates at 31 December 2021, compared to those anticipated at 31 December 2020.

Even if the balance sheet benefit of interest rate rises are excluded, our underlying business improved, with our operating profit for the year under review amounting to £7,701,000 compared to £6,704,000 for the previous year ended 31 December 2020 when we had the bulk of the problems of Covid related reliefs and tenant failures which we had to deal with and absorb.

Additionally, this year our property management costs increased by £1,169,000. Just under half were extra holding and repair costs of the vacant properties we received back following the Beales business failure, some of which properties have now been let or sold. Legal costs were over £300,000 higher, substantially due to the costs imposed on the Group by our lenders to confirm the charging arrangements for the refinancing of properties already charged to our lenders.

Our bad debt charge was much reduced to £286,000 from the £1,629,000 charged last year when the tenants' problems relating to the pandemic were unknown and financially not easily quantifiable.

Rents Receivable

Rents receivable for the year ended 31 December 2021 were £13,172,000 compared to the previous year's £13,051,000. This was despite loss of rent of £133,000 due to the disposal of factories at Wembley and our largest tenant vacating Maldon warehouse during the last two months of the year.

Disposals

There were a number of significant disposals during the year which produced a total profit of £701,000 on sales of £15,841,000, seemingly a low profit margin but the properties had been independently re-valued for the lenders in December 2020 and July 2021.

Fourth Way, Wembley

Four older style freehold factories producing £254,000 p.a. sold for £8,700,000. The remaining part of our estate in Fourth Way, Wembley was retained, producing £249,750 p.a. and comprises seven more modern single storey factories totalling 15,783 sq. ft. and held on aground lease where the rental payable to our freeholders is 25% of rental value, reviewed every five years.

37/39 Market Place, Great Yarmouth An ex-Beales store (previously Palmers)

The vacant freehold was sold to Great Yarmouth Borough Council for £1,325,000 which showed a profit on book value. We have retained the freehold of the 70 space adjoining car park which is managed by Great Yarmouth Borough Council, on our behalf, which in pre-pandemic years had produced over £65,000 p.a.

West Molesey

This freehold 36,000 sq. ft. older style factory situated on a one acre site was sold for £3,900,000 (at book value). It was let at £267,000 p.a. but with the tenant expected to vacate at the end of their lease in June 2022.

Mansfield

This former Beales store, now vacant, with approximately 150,000 sq. ft. of multi storey department store space in need of complete redevelopment or refurbishment, was sold to Mansfield District Council. This is to be a major part of their town centre rejuvenation project.

We received £1,500,000 against its book value of £1,650,000. We retained the part of the former Beales store that is part of the Four Seasons Shopping Centre, the main shopping centre for the town. This a modern centre and our building contains 27,000 sq. ft. This adjacent scheme will in due course improve our property as the town centre rejuvenation takes place. Our interest is a virtual freehold at a nominal ground rent.

The Quadrangle, Glasgow

We have contracted to sell our site/building at The Quadrangle, Glasgow, which sits on a corner site of 94,000 sq. ft. on the canal and is ideal for a social housing development. The price agreed is £1,250,000, subject to planning which should be received this year. We received a £100,000 deposit with £65,000 released to us on exchange as non-refundable.

60 High Street, Sittingbourne

This shop property was sold in May to the tenant for £450,000. We provided a loan of £350,000 secured on the property to assist the tenant's purchase. We charged a high rate of interest and shortly before the year end the tenant paid off £150,000 thus leaving £200,000 outstanding due for repayment in May 2023 (post balance sheet date a further £75,000 paid).

Acquisitions

In January 2021 we exchanged contracts to purchase a substantial freehold factory and warehouse in Trowbridge, Wiltshire, of approximately 96,000 sq. ft. of usable space situated in approximately six acres of industrial land. This property is situated on one of the best industrial estates in Trowbridge where demand should be good. The contract price agreed is £3,300,000 with a delayed completion of between 15 and 30 months depending upon timing of the completion of the vendors' new building. Should it be necessary for a further delay, the vendors have agreed to pay a rent of £340,000 p.a. until they vacate.

This purchase will further diversify our portfolio by adding this industrial investment. The spread and variety of rental streams within our portfolio helped us to pass through the pandemic with relatively few issues.

Completion is now expected in June 2022 and we have already received approaches for the property, some to purchase, but we would prefer to let the property and retain as an investment as with a 9 metre eaves height and good circulation and loading facilities, it should have a premium rental value.

Developments Broadstairs

At long last this development is finished, with Tesco trading successfully in the shop unit since June 2021 and all twelve flats will shortly be fully let on assured shorthold tenancies and producing a combined total rent of £185,000 p.a. This is a quality addition to our portfolio.

Swindon

The problems with regard to the council's requirements for this scheme have nearly been resolved allowing us to move forward shortly with the planning permission. The redevelopment of this site in the centre of Swindon will soon proceed to the next stage.

Barry Parade, Peckham Rye

This potentially attractive scheme is still delayed by the council's ever changing and increasing costly requirements. We are still working on our appeal to take it out of the intransigent council's hands.

Peterborough

The former Beales store in Peterborough, currently partly occupied by New Start 2020 Limited, trading as Beales, is in the final stages of preparation prior to submitting a planning application for a large mixed-use development of shops/offices and 125 residential units whilst retaining a substantial part of the existing attractive Edwardian brick building façade. The current older style department store contains approximately 145,000 sq. ft. of space unsuitable for current retail markets.

Tenant Activity

During the year we also let or renewed circa 110 tenancies - the overall movement in the annual rent roll (letting and losses) resulted in a reduction of approximately £664,000. This decrease was primary due to the loss of our tenant in Maldon in November 2021 which had a negative effect on the rent of £600,000 p.a. but was offset by two new factory lettings at Tenbury Wells at rents totalling £170,000 p.a. The Tenbury Wells letting was particularly pleasing as these factories had been vacant for a number of years.

In addition to the above reduction in annual letting income, we provided approximately 30 tenants concessions to assist where possible at a total cost of £230,000 for the year (however these are one off short term concessions and not permanent adjustments to our rental income).

Fortuitously in March 2022 about four months after vacating, our former tenants at Maldon had their trading situation pick up sufficiently to re-rent the Maldon warehouse at £800,000 p.a., £150,000 p.a. higher than their previous rent. These additional rent benefits will be shown in our 2022 accounts.

As such if one adds back the Maldon annual rent lost in 2021 (as it was relet at a higher rent in early 2022), the headline annual rent roll was effectively pretty flat for the year, which is a good result given that the letting market in 2021 was again overshadowed by COVID-19.

Beales Stores

I have already mentioned the planning exercise for Peterborough, the sale of Great Yarmouth and Mansfield, and the lettings of part of the stores at Keighley and Beccles, plus fully letting Skegness in 2020. There are also a number of negotiations on parts of other former Beales stores, some of which may come to fruition soon.

Post Balance Sheet Events

Since the year end, as mentioned above, we re-let the Maldon factory at £800,000 p.a. (mentioned above) and we have exchanged a conditional contract for the sale of the vacant freehold shop and upper part in Clayton Street, Newcastle Upon Tyne for £940,000 which is above book value.

Staff

I have to give special thanks to all our staff who had to work another year with much more complicated arrangements due to Covid restrictions which caused problems for many of our tenants and consequently extra management time on our portfolio.

Loans

On 16 July 2021 we finally completed our refinance which consisted of a £66,000,000 loan for a three year period as a club facility jointly lent by HSBC and Santander. The loan has a term element of £55,000,000 and a more flexible revolving element of £11,000,000 which gives us the ability to pay down and redraw over the three year term.

The £66,000,000 was fully drawn but with the net proceeds from disposals we repaid our revolving facility.

The new loan is a more conservative facility agreement than we are used to with a headline loan-to-value covenant of 55%, when historically it had been around 65% (which used to be considered conservative!). The extra cautious nature shown by the lenders is also reflected by the smaller loan facility arranged (previously we borrowed £75,000,000 which is now £66,000,000).

The Banks also increased the margin from 1.95% to 2.70%. However, on 1 December 2021 we had a prearranged reduction in our fixed rates on £25 million of our loan, the saving in lower fixed rates being a bigger offset than the increase in costs from the higher loan margins now current.

Even though this was a much tougher and less generous refinancing, we appreciated our lenders' position and do not take their continuing support for granted. We have had a very amicable banking relationship with HSBC for nearly 40 years and Santander for over 10 years. This refinancing was the third iteration of this joint club loan.

Swap restructuring

In February 2021, the Group paid £5 million to vary a long-term swap agreement. The agreement varied was an interest rate swap fixed at 5.06% until 31 August 2038 on a nominal value of £35 million and has circa 16.5 years remaining. Following the Group's variation, the Group's fixed rate will drop on 1 September 2023 to 3.40% saving the Group £581,000 p.a. in cash flow until the end-point of the instrument.

Charitable Donations

In March 2022, the Group donated £20,000 to the Daily Mail Ukrainian appeal. We also made our other regular donations in the year including £10,000 to Land Aid and other smaller contributions being mainly adverts within charity programs or diaries.

Dividends

We paid a 6p share interim dividend for the year ended 31 December 2020 on 2 July 2021, and a further 6p per share final dividend for that year on 14 October 2021. We paid an interim dividend of 6p per share on 9 February 2022 for the year ended 31 December 2021.

Subject to shareholder approval at our Annual General Meeting on 15 June 2022, the final dividend of 6p per share will be payable on 20 July 2022 to shareholders on the register at close of business on 1 July 2022 (ex-dividend on 30 June 2022).

Prospects

It is now 50 years since I, my brother and Malcolm Bloch, took over the tiny, publicly quoted Levers Optical Co Ltd in 1972, which we turned into Panther Securities PLC, a successful property company that has continuously paid dividends (and where appropriate special dividends) for the last 40 years, so much so that I personally have not had the necessity to take a salary or receive a pension contribution for over 16 years and 25 years respectively.

In last year's accounts I announced that Simon Peters would be taking over as Chief Executive Officer, but I would continue as Chairman. This will allow me to extend my weekend to include Fridays, which will give me more time for my personal interests.

We have a loyal and experienced team that continue to perform successfully. It is worth repetition that our widespread portfolio of different types of properties, mostly producing rental income and many with development potential, provide a safe cover for all our interest payments and management costs.

We also have excellent relationships with our bankers, accountants, solicitors, agents and all other professionals needed to operate a widespread property business.

Thus, as always, I look forward to the Group's continuing success.

Finally, I repeat my thanks to our small but dedicated team of staff, growing team of financial advisers, legal advisers, agents and accountants for all their hard work during the past year. Special thanks and good wishes to our tenants and I hope they are able to overcome the present troubled environment and make a full and profitable recovery.

Andrew S Perloff

CHAIRMAN

22 April 2022