Final Results

Panther Securities PLC 27 April 2006 Panther Securities P.L.C., the property investment company has today announced its full year results for the year ended 31 December 2005. C H A I R M A N ' S S T A T E M E N T INTRODUCTION I am delighted to be able to present another year of excellent and record results. These annual figures are presented for the first time under the new International Financial Reporting Standards ('IFRS'), which accounts for investment properties revaluation surpluses being shown in the income statement, and also fully provides for deferred tax. Personally, I feel this to be an inappropriate way to present a property company's accounts, as it creates erratic figures depending on values at the date of revaluation, and gives the false impression that these profits have been realised. Under the IFRS, our pre-tax profit is £26,549,000 for the year ending 31st December 2005 compared to a pre-tax profit of £7,632,000 for the year ending 31st December 2004. The pre-tax profits shown previously under UK GAAP would have been £3,995,000 for 2005 and £3,139,000 for 2004 - whichever acronym is used, for this year, record profits are produced. Most of this profit (under IFRS) comes from the revaluation of our entire portfolio of investment properties carried out by Donaldsons and CB Richard Ellis. This produced an uplift of £22,537,000. They also re-valued our stock properties, reporting a value of £4,136,000 in excess of their book value, which is not incorporated in our accounts. Rental income receivable over the year fell from £9,100,000 to £8,097,000 due to property disposals made during the last two years. This is, of course, compensated for by a significant decrease in the net interest paid. DISPOSALS Coventry Our major disposal was the sale in February 2005 of our shops and office complex, Copthall House, Coventry, at a price of £9,250,000. This property was producing a gross income of approximately £760,000 per annum and after expenses, a net income of £480,000 per annum. This property was purchased in July 1996 for £3,245,000 and proved to be an excellent investment during our ownership, and throughout this time produced a high return. Stirling, Scotland Also, in February, the freehold shop investment at 14-18 King Street, Stirling, was sold for £525,000, this figure being over 10% in excess of its book value. This property was part of the Scottish portfolio of Eurocity Group. Abraxus PLC The 29% shareholding in this company acquired in November 2004 for £312,000 was sold in January 2005 for £87,000 profit. Ramsgate We disposed of a small property in High Street, Ramsgate, which had been held as trading stock. This was sold at auction for £400,000, a figure well in excess of its original cost. We still hold another property in High Street, Ramsgate, for which we are attempting to obtain planning permission for residential development. If successful, there should be substantial added value. Bristol For some years I have been writing about our investment in Symes Avenue, Hartcliffe, Bristol. Most shareholders will know that an enormous amount of time, effort and money were put into producing a development scheme utilising some adjoining Council-owned land that would have been beneficial to the local community - but the Council eventually wanted such a large amount of extra Section 106 benefits for the 'community' that the original 'provisional' profit-sharing terms agreed would have resulted in a loss. We withdrew from these arrangements and decided to sell the property at auction in separate lots. The local authority had been threatening to use their compulsory purchase powers. However, they offered £1,000,000 for the centre which comprised thirty shops (mainly vacant) and upper parts whilst intimating they would press for a much lower figure at a CPO hearing. Negotiations had been taking place in vain for some years. Upon learning of our intended actions, the local authority increased their offer eventually to £1,350,000. Even at this level they were unable to sign a contract and merely 'promised' to use their best endeavours to proceed at that figure. We proceeded with the auction. If there is one thing I have learned over my forty years in the property business, it is that you cannot trust a local authority, government body or any tier of their bureaucracy to proceed with an agreed matter unless it is bound contractually by a water-tight contract, and even then, if large enough amounts are involved, the rules can be changed to enable bureaucrats to wriggle out of commitments they have made (as they did, you will recall, in the case of Railtrack). The auction produced approximately £75,000 more than the Council's best offer. Whilst I consider this a failure, it still produced a good profit as we had retained a cautious book value on the property in case the local authority had succeeded in shafting us. 27/37 Main Street, Wishaw This was sold in November 2005. These properties were two adjoining shop investments and part of the original Eurocity portfolio. Through our Scottish agents, we had managed to obtain a surrender of one unit, which was let but not occupied, and simultaneously arrange for a new letting to the Bank of Scotland on a 15 year lease. Both investments were then offered for sale at auction and sold for approximately £1.8 million, a substantial increase on book value. INVESTMENTS Hawtin PLC In June 2004 Panther acquired approximately 15% of Hawtin PLC ('Hawtin'), an AIM listed company, at a cost of £1,488,000, with one of my private companies having one week previously purchased 14.5% at the same price of 13p per share. I was shortly thereafter invited to and did join Hawtin's board. In June 2005 Hawtin announced that it was in discussions with Panther which might or might not lead to an offer for Hawtin. Hawtin owns two substantial factory investments and 35 acres of virgin land in Gwent, South Wales, the smaller part of which is zoned for residential use and the larger part for industrial use, this use having a much lower value than the residential use. We were unable to agree suitable terms to justify Panther making an agreed offer for this company and this was announced on 10th November 2005. Very soon thereafter, we received an approach to purchase our holding. These negotiations were successfully concluded in January 2006, when we sold virtually all of our holding at 18.25p per share, which we considered a very satisfactory result. Real Estate Investors PLC We now hold about 8% of this small AIM Listed property investment company, the greater part of which we received in part consideration of our sale to them of Eurocity (Crawley) Limited in May 2004. We are confident that in due course it will show us a good profit. Elektron PLC Our holding is approximately 11.5% of this company which is performing extremely well. Its profits have increased substantially and the company after three years has resumed paying dividends. ACQUISITIONS Due to the difficulty of finding fair value we only managed to buy one freehold geared ground rent in Nottingham, and one well-located freehold shop investment in Plymouth, at a total cost of £600,000. Subsequent to the year end, a more substantial freehold shop investment let to HMV PLC was acquired for £900,000, situated close to the prime shopping position in Southend. Whilst only producing a 6% return, it does have medium term development prospects. FINANCE In December 2004 we concluded arrangements for a new £75,000,000 seven year loan facility with HSBC PLC of which, at the year end, only £43,000,000 was drawn down and under which we could draw an additional £7,000,000 without providing extra security. Our cash balances at 31st December 2005 were £14,000,000. Post Balance Sheet Events As already mentioned, in January 2006 we sold the majority of our Hawtin shares at 18.25p per share which, after costs, gave us a profit of approximately £450,000. In February 2006, we sold two more Scottish properties from the Eurocity portfolio, namely 22-24 Westburn Street, Greenock, for £700,000 and 70 High Street, Elgin, for £583,000. Both of these prices were slightly in excess of the latest valuations. DIVIDENDS A special interim dividend of 10p per share was paid on 28th June 2005, a second interim dividend of 5p per share on 28th October 2005, and your Board is recommending a final dividend of 5p per share (making a total of 20p per share), for the year ending 31st December 2005. In view of the current year's progress, an increased interim dividend of 6p per share will be paid at the same time as the payment of the final dividend for 2005. The Board has decided to offer the facility of allowing dividends to be paid directly into shareholders' bank accounts. The authorities and details needed to enable payment in this way will be dispatched directly to shareholders by the registrars with the next dividend payment. CHARITABLE DONATION In January 2005 we donated £10,000 to the Daily Mail Tsunami Relief Fund. We felt sure that all shareholders would have supported this proposal. Political Support Last year shareholders approved a resolution to donate £25,000 to the Conservative party. Bearing in mind the present controversy over political donations, I can assure shareholders the only title I have been offered is 'mug of the year'. Despite this, I have proposed the same resolution to contribute, and like previous resolutions on this subject, I will not vote my personal controlling shareholding. Whilst on the subject of voting, however, I would point out that when, in a recent election in Israel, the leader of their most popular party was in a coma - in this country a large part of our electorate seem to be in a 'coma' when it comes to voting. That is why political support is so important in order that a clear message can be promoted. OUTLOOK The property investment market is extremely resilient with huge extra demand produced by private buyers extending their sights from residential investment to the commercial sector, often financed with highly leveraged borrowing. My view is that there is unlikely to be much rental growth due to the harsh trading environment, particularly in the retail sector. Over the last year or so, we have seen a number of large retail groups go into administration or receivership - Allders, Courts, Walmsley, QS Stores, BeWise, Sock Shop, Unwins, Feather & Black, Kookai, All Sports, Durham Pine, H.P.T. Jewellers and M.V.C. - one might be tempted to say R.I.P. but, thankfully, they don't. These groups trade from thousands of units and whilst many are resuscitated to be able to continue to trade in a reduced form, their suppliers, their banks, their landlords and their shareholders nearly always lose out -this must have a detrimental effect on rental values over the medium term. We are not immune from the carnage on the High Street, but to date have suffered lightly - having only a small number of units vacant because of bankruptcy or insolvency, and whilst we continue to receive rent from administrators or successors, some units are now occupied in a less secure format, as allowed for under the rules governing administrations within the Enterprise Act 2002. PROSPECTS Our widespread and diverse portfolio provides good protection for the future. Our finances are currently in the best shape they have ever been, but it is proving difficult to find attractive opportunities to invest our substantial funds, although I am confident in due course we will be able to do so. The Shambles continues, and as you will see, I add a personal supplement to help me let off steam, a need fuelled by the deceit and larcenous rapacity of our 'elected leaders'. MISSION STATEMENT It seems nowadays that I have to state our company's objectives. Well, it has not changed in over thirty years. Utilising our experience in the real estate sector and related fields, it is to make as much money (real profits) as possible, and grow the net assets of the company with the capital we have available to us, always mindful of careful limitations on the risks involved. I feel we have been successful in that regard, for in the last 25 years (since we changed to purely property) our net assets have grown from 2p to over 400p per share. This ignores the fact that over the past 23 years we have paid rising dividends so that this year's is over 100 times greater than in 1982. This success is mainly due to our small dedicated team of staff, our financial advisers, legal advisers, agents, accountants and, of course, our tenants - to all of whom I am grateful. As ever, despite the many uncertainties, I view our future with optimism and confidence. A. S. Perloff Chairman 27th April 2006 T H E S H A M B L E S C O N T I N U E S Last year's supplement contained a five page litany of the shambolic system we all live under, and two thirds of us pay for. We are, however, lucky that we live under a system which still has a free press, and of late, it is nice to see that the press are beginning to focus more on the devastating problems brought about by an incompetent and self-interested administration, upon much of which I have been commenting for five or six years. First, however, I refer to some matters mentioned last year. Our site in High Street, Ramsgate, still awaits a decision on our planning application. One planner had wanted a modernist approach, but when a new officer took over, a traditional style building was stipulated; then the personnel changed and the result - a more modern facade was once again in favour; having phoned the planning officer about 10 times, I received only one return call! This is in a region that is relatively developer-friendly. Many of you were interested in the planning problems I was experiencing on the application to redevelop my own home. Building new for old is normally a formality. Beside the usual delays, I had the added problem that a bat had visited my home. I was thus forced to have a series of bat surveys throughout the summer period, which delayed the decision-making process by a further 10 months, the surveys being carried out at dusk on four occasions, by two young students with binoculars and a bat ray gun, which could pick up the bat's vocal communications and differentiate the tones to see if it belonged to a rare or less rare species of bat. I am pleased to report that the bats were not living at my residence, but merely cruising my road en route elsewhere. Towards the end of their report the authors stated that it was unlikely that the bats would settle in my rafters due to the high level of exterior lighting that existed. The exterior lighting (for security purposes) has not changed for many years - if the council were not forced to forever cover themselves by the politically correct lobby, they could have decided that the surveys would have been unnecessary from the word go! More interesting was what happened at the planning committee meeting, which I attended. The committee of five counsellors sat facing six council employee officers with the interested general public seated further down the room, any of whom could pre-register to speak to the committee about any planning matter on the agenda just prior to its consideration. I had been told that my application was being recommended, so that I did not need to register. There were probably about 16 members of the public attending. My application was number 5 on the agenda, all the previous matters being rather minor, such as side extensions, conversions of upper part of shop into two flats, etc. One application was apparently quite simple; a planning permission renewal for 8 residential units and a new scout hut replacing the old scout hut, but taking up less space. There were a few objections from neighbours. The land was owned by the council. One of the councillors, a young attractive and well spoken lady asked the planning officer why, in view of the serious shortage of homes in the area, the Council had not dealt with the development earlier within the original five year period allowed. An ostensibly, more experienced and older Council employee, probably from their 'spin' department, answered, or should I say, failed to answer, the question, offering a long oration about the need for homes, and not looking back into the past, but dealing with the position as it is now etc, etc, etc. The young councillor had not been to the Alan Sugar apprenticeship charm school, and was too polite to say 'cut the bull***t , give me a proper answer!'. Next came my application - this took as long as all the earlier applications put together. The planning officer was very good at explaining at length that, although my application was bigger than most of the single house applications in the area, (representing an increase in size of approximately 10%), he nevertheless felt that because of the height reduction, the fact that the property was set back a further 20 feet from the road and thus less obtrusive than the existing house, and its design included a number of attractive features, he could recommend the application for approval. There were photos and photo slides of the plans, and after a number of questions, about trees and access, it was about to be put to the vote. A young woman on the council employees' table, who chaired the entire meeting and was probably the council's legal secretary - prior to putting my application to the vote said - 'Speaking for myself, I think this building is hideous'. I was fuming that this 'Marxist', who should have been neutral, should express an opinion. I was about to jump up and have my say about taste - but my instinct told me that the majority of the councillors would approve my application and my story may not have helped, so I remained silent. My application was approved unanimously. However, the story I would have told them may interest and amuse my shareholders. Some twenty five years or so ago, I went on holiday to the Far East, with three other not-so-young single men. The weather was good, the food different and the night-life exciting. One night my friends and I went to the top night club in this seaside resort. The club had a live band with a beautiful and curvaceous singer with long black hair in an expensive ball gown, who sang many old standard songs, in English. The youngest member of our group struck up a friendship with the singer, and by the end of the evening, after much dancing, champagne cocktails and little conversation (it was so noisy there), the entertainer agreed to accompany him back to our hotel for further drinks. We all trooped back to our luxury hotel with a tinge of jealousy amongst the rest of us. We arrived at our hotel and, as we entered, the ever-vigilant manager rushed up to my friend and stated that his new friend could not accompany him to his room. Asked why, he was told he had only paid for a single room, and an additional person in the room would cost an extra £15. My friend was in no mood or state to dissent or haggle, so he signed a chitty. We then disappeared to our separate rooms. About half an hour later I was disturbed by a loud commotion in the corridor. I, of course, instantly went out to see what the problem was. My young friend was there, dishevelled as was his 'new friend', but gone was his wonderful tan - he looked green. He shouted to me - 'She's a He, She's a He!' and promptly escorted her/him down and out of the hotel. It was when I got downstairs that I found my friend (having regained his composure) arguing with the manager - he was explaining the situation and demanding his £15 chitty back. In the course of the discussion, the manager said 'Of course I knew that she was not a lady'. 'Why didn't you tell me?' my friend shouted. I recall to this day, the manager's deferential words: 'Sir, I could not possibly know your taste.' However, my friend did retrieve his chitty. The manager was right, and this reminds me of one of the things that are so wrong in this country - elected officials always seem to want to impose their own taste and ideals on everybody else. Whether it be in planning design, use of premises, what we eat, what we drink, when we eat, when we drink, whether we smoke or not, what car we drive, at what speed, what vaccinations we must take, what education our children must receive, whom we employ or dis-employ, where we get our medical treatment, what treatment we are allowed, what sports we should pursue, etc, etc. Of course, the management and often the enforcement of these restrictions are all paid for by the taxpayer, and usually by those who need the least help in these areas. A little while ago, I received a short standard form advising me that having just turned 60 I was entitled to a £200 winter heating allowance. The form had my correct address (and postal code), date of birth, national insurance number and appeared to know everything about me, except what I had had for breakfast. Not one to look a gift horse in the mouth, I instantly filled in the form and sent it back, looking forward to receiving the cheque, which would have been framed and hung on the wall in a prominent position, as being the only financial gift I had ever received from government. When the DHSS letter arrived, I eagerly opened it, only to find another form stating that I had not sent in my original birth certificate and advising that I should obtain one and send it or go to the job centre, where they would copy it, authorise its authenticity and then after I sent it back to them I would receive my £200. For the last 40 years, I have been paying my taxes and national insurance, which for many years have been in eye-watering huge amounts, not once but twice a year on top of the monthly deductions taken out of my salary before I see it. Not once during these last 40 years have I ever been asked to show my birth certificate before they demanded money - perhaps I might be able to claim it all back! Some hope! It seems once again opportune to underscore my point that any government handout is deliberately organised in a manner to create as much extra wasteful expensive civil service employment as possible, ie, DHSS form sender, post office, registrar of births, deaths, jobcentre copier. Why not a simple computer generated card from your tax office, 'Congratulations on having reached 60 - enclosed is a £200 present from H M Government!' Many of you must think that I am so aggravated with the incompetence, and waste in central and local government that I lose sleep. Not often, but the other night I had a wonderful dream.......... I dreamed that I was twenty years younger, six inches taller and two stone lighter, and spoke with the eloquence and good humour that usually comes from an education at one of our better public schools. After one year of tele-visual presentation promising improvements in everybody's quality of life - protecting the environment, improving hospitals, schools, helping farmers, dogs, children, promising less crime, making women more equal, helping pensioners, new born babies, controlling immigration, making housing more affordable but not lowering the value of people's homes and creating every other possible benefit and class of beneficiary, I was, of course, the one chosen to implement the changes. Standing upon the steps of Downing Street, I issued my Mission Statement; no longer would we be a welfare state, a state of supplicants, claimants, state dependants and litigants - but we would become a well-off state, where everyone was capable of living a healthy, comfortable and caring life through their own and their families' efforts; one where the state's interference in everyone's daily life would gradually disappear; and where respect for the teachers, police, the justice system, your elders and even possibly politicians, would reappear. My policies would all be based on two premises - simplification and a factor or multiple of the magic number 15. Thereafter, I would be called 'The Mr 15% Simpleton'. I started with Tax Tax would be simplified. Income tax would be at the flat rate of 15% on all personal incomes above £15,000 per annum. There would be no differentiation as to source of income and no allowances other than the new special allowances I would grant. Tax credits would be abolished, unemployment benefit and disability benefit would be aligned at one rate being the current average of both rates. The severely disabled would be further assisted under the much improved health service that would be provided. Capital Gains Tax would also be 15% on all gains over £15,000 per person; Capital Gains would, however, taper down to zero over a 15 year period of ownership. There would be no other reliefs whatsoever (other than for earlier losses). Amnesty would be granted to all of the approximate 100,000 tax exiles who wish to come back to our shores under our new and enlightened tax regime. This will produce a minimum £5 billion additional revenues. Inheritance Tax would be payable at 15% on all estates over £300,000. There would be no reliefs, although all estates would have between 5 and 10 years to pay (at base rate interest) depending on whether the estate's assets were illiquid or a family business. Corporation Tax would be 15% again with no allowances. Companies would pay a 5% payroll tax on their total payroll. Individuals would not pay. Stamp Duty on property purchases would be 1.5% on the purchase price and as under the old stamp duty regime on the entire price. National VAT at 15% would be paid on all purchases (other than private housing) commercial property purchases and rents would all be subject to VAT. All food, baby, clothes, medicines, etc would be included. A local variable rate of VAT of Nil to 5% could be charged by county-based authorities with a view to reducing the council tax payable. Rates for commercial properties would be reduced by 15%, and vacant rates payable at 15% of the full value. All previous pensioner inducements such as heating allowances and grants would be abolished, and compensated for by a rise of £1,500 per annum per person. Pensioners would also receive an extra £1,000 per annum at aged 75, a further £1,000 at 80 and an extra £1,000 each five years thereafter. Their income will, of course, be taxable after the first £15,000 per annum, but they will only pay at 75% of the normal rate and 50% when over 80. The cost-saving measures I would implement to allow for the benefits proposed are as follows:- All persons whose salary is derived directly from the state, including local authority, education, health authorities etc, will in future be paid net of tax at the rates they are currently being paid under the old tax system. It will be treated as tax free income, and restricted to inflation-indexing for three years. This is so that only private sector workers can benefit from the tax cuts. I envisage many public employees would welcome the changes because any additional earnings they earn outside their public duties would be less taxed. 50% of all quangos would be abolished within three months (do we really need a Millennium Commission with 994 years to go?), and the remainder investigated to see if they are really necessary, with a view to abolishing them all within a year. A referendum would be held on whether we pull out of the European Union, and agree a free trade area with the EU - this would save about £9 billion per annum, (I have assumed the result would be yes) £1.5 billion p.a. of which would be allocated to industries that might suffer, in particular our farmers and fishing industry, to promote, rebuild and protect them from the changes. From 2012, everybody would be entitled to their pension - men and women alike, when they reach 68. All laws and rules which could be considered to concern 'Political Correctness' would be abolished within the central, local government and police authorities. All departments dealing with matters considered politically correct, or relating to ethnic diversity and cultural integration would thus be closed down. All regulations to do with employment rights, health and safety, disability discrimination etc, would be watered down to practical levels and waived for companies that employ less than 100 people. Small companies have a better communication and liaison with their employees, and legislation is unnecessary and only serves to disturb rapport. Public sector employment would initially be reduced by at least 15% over a five year period, mostly by natural wastage. The massive savings expected would allow for my change in the tax system. The changes so far presented would probably produce over 500,000 less employees in the public sector within five years - a saving of £25 billion a year in running costs. I would expect most of them to find employment in the revitalised private sector, whose GDP would grow at 3% per year above the norm for the next five years, producing and adding an extra £20 billion per annum to government revenue, making the UK the tiger economy of the Western world. Transport Policy In an effort to produce a more mobile and co-ordinated transport system, all speed limits would be raised by 15% - local authorities would remove 50% of all humps and bumps, and to further improve road safety, 50% of speed cameras on the independently assessed least dangerous roads would be temporarily covered and bus lanes abolished. Local authorities would be forced to bring traffic wardens back under their direct control, employing no more than 30% of those currently employed. Any person caught speeding where there is no question of serious danger, or involving an accident, will have a valid defence if more than 25% of police officers/councillors or MPs or their drivers have been caught on camera or otherwise and not prosecuted in the county where the offence was committed. Road tax will be raised to £300 per annum on all cars, which must not only display road tax discs but also an insurance cover disc which must tally with the car and owner. Users of uninsured and untaxed cars will receive more severe fines. On a second conviction of intent to fail to pay, cars would be confiscated for a period of months. Road improvements would only be carried out after careful consultation with the county and adjoining county co-ordinating department. Works contracts will have a shorter time allocated so as to reduce disruption times. Crime A referendum would be held as to whether a re-introduction of the death penalty should be brought in for premeditated murder and/or murder in the course of a serious premeditated crime. To encourage proper policing, the top 10% senior police officers per county would receive 20% pay bonuses, allocated annually, by the police committee of the local authorities. The three most senior policemen in each county would stand for election on their record every five years. Police forces would be modernised with more civilian employees taking on backroom office functions and unnecessary form filling would be scrapped and methods would be found to prevent them wasting time hanging round courts which will be made more efficient. Likewise, the top five posts in the Crown Prosecution Service would be elected every five years. All prosecutions would be subject to my new law called the 'common sense law', which would prohibit prosecutions that to the general public would seem ridiculous, ie car splashing a policeman, calling someone a rude name, a 10 year old pulling another child over, a parent smacking their child, putting the wrong litter in a litter bin, etc, etc. Each court would have a jury of 15 locally selected council tax payers, who all sit for one week and consider the Crown Prosecution proposed cases (with anonymity for the people concerned), and cases which the jurors considered not 'common sense' by a majority decision would be dropped. 15% extra prison places would be built and all criminals will serve their full sentences. Persistent offenders would be dealt with far more severely, particularly for crimes that involve violence. All householders would have an absolute right to defend their homes (including businesses, family and employees) and criminals would lose rights to sue if their claims occurred in pursuit of a crime. Education All state run schools would be turned into local associations, with parents having control of the local governing board. They will be able to charge fixed rate fees (minimum and maximum) adjusted annually. All parents would be issued with vouchers for the average education charge which can be used at any school of their choice. It will be the parents' responsibility to get their children to their school of choice. The school board will choose the curriculum, school hours and holiday dates. A school can become a specialist school if local demand desires it. The only obligation would be that they teach the six Rs - reading, writing, 'rithmetic, reliability, responsibility and respect, to an agreed standard. All schools would have their own individual uniform, which all children would be proud to wear. Corporal punishment under the schools' rules would be encouraged. Prosecutions against teachers would have to pass a test of seriousness and probability before being considered for implementation. Violence against teachers by pupils or their parents would be treated on a more serious basis. Health The National Health Service would be privatised by being split into 30 separate corporations and sold off. Everybody would be given full insurance cover to pay all medical bills which the government would purchase using its ability to negotiate in a free market. Everybody who is legitimately on the record would receive an annual insurance certificate which they could take to the hospital of their choice or doctor's recommendation or shop around for the most suitable facility for timing or location, and on presentation of their certificate, the appropriate insurance company would be billed and pay direct to the hospital corporation. There would be special arrangements for emergency treatment. Most insurance companies would be interested in both the combined hospital ownership and insurance, confident in the knowledge hospitals can be run more efficiently and thus profitably. Hospital campuses would be excluded from planning rules so that nurses' and doctors' accommodation could be built quickly on the campus. Everyone visiting a doctor who was not in employment would pay £10 with a limit of paying this four times a year. Under my new tax incentive rules, working for a living would be so much more financially rewarding than social security/disability benefits, the nation would see a miraculous improvement in the nation's health and relieve pressure on general practitioners. At least 1,000,000 people would recover from their ailments - a massive saving on our social security payments. Immigration Whilst I would welcome a fair degree of immigration, it would be carefully monitored and controlled to allow painless integration into the community. 30% of the traffic wardens made redundant in my traffic improvement measures would be taken on as immigration inspectors and paid a commission on each illegal immigrant they catch. With the excessive zeal shown in their previous job and their ability to blend into the background until an opportune moment, and most importantly, their proven aptitude for enforcing the rules with such rigour, they would sort out the problems very quickly. As a gesture of goodwill to our friends overseas: I would have Ken Livingstone seconded to Beijing to assist in local traffic and planning systems; Gordon Brown to Zimbabwe to assist President Mugabe in his efforts of furthering redistribution; and John Prescott to Hollywood in a remake of 'On the Waterfront' and cast as Terry Malloy. By the way, the Blairs had to sell their property portfolio at a huge loss and retired to Tuscany in a villa provided by a recently and forcibly retired foreign friend. I was having such a nice dream, and I awoke, looked out of my window and saw it was a beautiful sunny day with lots of small clouds, when I was suddenly aware of the loud sound of a cuckoo singing. Obviously I had been in cloud cuckoo land. CONSOLIDATED INCOME STATEMENT ------------------------------- For the year ended 31 December 2005 ------------------------------------- Year ended Year ended 31 December 2005 31 December 2004 £'000 £'000 Revenue 8,498 9,194 Cost of sales (2,035) (1,487) ------------------------------------------------------------------------------- Gross profit 6,463 7,707 Other income 133 98 Administrative expenses (2,061) (1,988) ------------------------------------------------------------------------------- Operating profit 4,535 5,817 Profit on the disposal of investment properties 1,608 527 Movement in fair value of investment properties 22,537 4,714 Finance costs (3,281) (3,996) Investment income 877 408 Profit on disposal of available for sale investments (shares) 87 43 Profit on sale of subsidiary 66 82 Surplus of assets acquired over consideration given 17 - Income from associate 103 37 ------------------------------------------------------------------------------- Profit before tax 26,549 7,632 Income tax expense (5,938) (1,541) ------------------------------------------------------------------------------- Profit for the year 20,611 6,091 =============================================================================== Attributable to: Equity holders of the parent 20,611 6,087 Minority interest - 4 ------------------------------------------------------------------------------- Net profit for the year 20,611 6,091 =============================================================================== Earnings per share Basic and diluted 121.3p 35.8p =============================================================================== CONSOLIDATED BALANCE SHEET As at 31 December 2005 31 December 31 December 2005 2004 ASSETS £'000 £'000 Non-current assets Property, plant and equipment 9 9 Investment property 99,881 87,812 Interests in associate 364 260 Available for sale investments (shares) 3,047 3,419 ------------------------------------------------------------------------------- 103,301 91,500 ------------------------------------------------------------------------------- Current assets Stock properties 9,534 9,755 Available for sale investments (shares) 410 323 Trade and other receivables 3,196 4,263 Cash and cash equivalents 14,546 15,337 ------------------------------------------------------------------------------- 27,686 29,678 ------------------------------------------------------------------------------- Total assets 130,987 121,178 =============================================================================== EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Capital and reserves Share capital 4,250 4,250 Share premium account 2,886 2,886 Capital redemption reserve 571 571 Retained earnings 59,925 42,164 ------------------------------------------------------------------------------- 67,632 49,871 Minority interest - 94 ------------------------------------------------------------------------------- Total equity 67,632 49,965 ------------------------------------------------------------------------------- Non-current liabilities Long-term borrowings 46,562 58,925 Deferred tax liabilities 11,010 7,154 ------------------------------------------------------------------------------- 57,572 66,079 ------------------------------------------------------------------------------- Current liabilities Trade and other payables 4,350 3,845 Short-term borrowings 187 210 Current tax payable 1,246 1,079 ------------------------------------------------------------------------------- 5,783 5,134 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Total liabilities 63,355 71,213 ------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Total equity and liabilities 130,987 121,178 =============================================================================== CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE For the year ended 31 December 2005 Year ended Year ended 31 December 31 December 2005 2004 £'000 £'000 Movement in fair value of available for sale investments (shares) taken to equity (66) 786 Deferred tax relating to movement in fair value of available for sale investments (shares) taken to equity 20 (236) ------------------------------------------------------------------------------- Net (expense) / income taken directly to equity (46) 550 Profit for the year 20,611 6,091 ------------------------------------------------------------------------------- Total recognised income and expense for the year 20,565 6,641 =============================================================================== Equity holders of the parent 20,565 6,637 Minority interest - 4 ------------------------------------------------------------------------------- 20,565 6,641 =============================================================================== CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2005 Year ended Year ended 31 December 31 December 2005 2004 £'000 £'000 Cash flows from operating activities Operating profit before interest, investment income and tax 4,535 5,817 Add: Depreciation charges for the year 9 14 Add: Write down of available for sale investments (shares) - current assets 12 - ------------------------------------------------------------------------------- Operating profit before working capital changes 4,556 5,831 Decrease / (increase) in stock properties 221 (967) (Increase) / decrease in receivables 1,067 1,416 Increase / (decrease) in payables 329 1,080 ------------------------------------------------------------------------------- Cash generated from operations 6,173 7,360 Interest paid (3,105) (3,999) Income tax paid (1,896) (1,353) ------------------------------------------------------------------------------- Net cash from operating activities 1,172 2,008 ------------------------------------------------------------------------------- Cash from investing activities Purchase of plant and equipment (9) - Purchase of investment properties (632) (1,087) Purchase of available for sale investments (shares) - current assets (7) (1,798) - non current assets (100) - Investment in subsidiaries (76) - Proceeds from disposal of subsidiary 66 (42) Proceeds from sale of investment property 12,707 9,490 Proceeds from the disposal of available for sale investments (shares) - non current assets 399 830 Dividend income received 37 45 Interest income received 840 360 ------------------------------------------------------------------------------- 13,225 7,798 ------------------------------------------------------------------------------- Cash from financing activities New loans net of repayments (12,384) 4,447 Dividends paid (2,804) (1,360) ------------------------------------------------------------------------------- (15,188) 3,087 ------------------------------------------------------------------------------- Net (decrease) / increase in cash and cash equivalents (791) 12,893 ------------------------------------------------------------------------------- Cash and cash equivalents at the beginning of period 15,337 2,444 ------------------------------------------------------------------------------- Cash and cash equivalents at the end of period 14,546 15,337 =============================================================================== RECONCILIATION OF THE OPENING POSITION PER UK GAAP AS PREVIOUSLY REPORTED TO IFRS AND CHANGES IN EQUITY For the year ended 31 December 2005 Share Share Revaluation Capital Retained Total capital premium reserves redemption earnings £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 2005 (under UK GAAP) 4,250 2,886 27,515 783 19,554 54,988 Changes in accounting policy: a. Negative goodwill - - - (212) 783 571 b. Deferred tax - - - - (7,154) (7,154) c. Accrued dividend - - - - 680 680 d. Shares carried at fair value - - - - 786 786 e. Revaluation reserve - - (27,515) - 27,515 - -------------------------------------------------------------------------------------------- Balance at 1 January 2005 (under IFRS) 4,250 2,886 - 571 42,164 49,871 Movement in fair value of available for sale investments (shares) - - - - (66) (66) Deferred tax relating to movement on fair value of available for sale investments (shares) - - - - 20 20 Profit for the year - - - - 20,611 20,611 Dividends paid - - - - (2,804) (2,804) -------------------------------------------------------------------------------------------- Balance at 31December 2005 (under IFRS) 4,250 2,886 - 571 59,925 67,632 ============================================================================================ NOTES TO THE RECONCILIATION OF THE OPENING POSITION PER UK GAAP AS PREVIOUSLY REPORTED TO IFRS AND CHANGES IN EQUITY For the year ended 31 December 2005 a) Under International Financial Reporting Standards (IFRS), any negative goodwill arising is required to be taken to the Income Statement. This has resulted in an increase in retained earnings by £783,000 under IFRS compared to UK GAAP. b) Under IFRS, deferred taxation is required to be recognised on revaluation gains arising on investment properties. This has resulted in an increase in the deferred taxation provision of £7,154,000 under IFRS compared to UK GAAP. c) Under IFRS, dividends declared after the balance sheet date should not be recognised as a liability at the balance sheet date. This has resulted in an increase in retained earnings by £680,000 under IFRS compared to UK GAAP (prior year). UK GAAP rules have recently changed so that the accounting treatment is now consistent with IFRS's regarding the treatment of declared dividends. d) Under IFRS, gains and losses arising on revaluations of available for sale investments (shares) are taken directly to reserves as part of retained earnings. This has had an effect of increasing retained earnings by £786,000 under IFRS compared to UK GAAP. e) Under IFRS, gains and losses arising on revaluations of investment properties are taken directly through the income statement as part of retained earnings. This has had an effect of increasing retained earnings by £27,515,000 under IFRS compared to UK GAAP. NOTES TO THE PRELIMINARY ANNOUNCEMENT For the year ended 31 December 2005 1. General Information While the financial information included in this preliminary announcement has been prepared in accordance with International Financial Reporting Standards (IFRS's), this announcement does not itself contain sufficient information to comply with IFRS's. The Company expects to publish full financial statements that comply with IFRS's in May 2006. The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 December 2005 or 2004. The financial information for the year ended 31 December 2004 is derived from the statutory accounts for that year, which were prepared under UK Generally Accepted Accounting Principles (GAAP), which have been delivered to the Registrar of Companies. The auditors' opinion on those accounts was unqualified and did not contain a statement under s237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 31 December 2005 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting. In the year ended 31 December 2005, all European Union listed companies are required to prepare consolidated financial statements using IFRS. The group has adopted all of the new and revised standards and interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB and endorsed by the European Union that are relevant to its operations and effective for accounting periods beginning on 1 January 2005. These changes were explained in the interim report 2005. There is no material seasonality associated with the Group's activities. 2. Taxation The charge for taxation comprises the following: 31 December 2005 31 December 2004 £'000 £'000 Current year UK corporation tax 2,242 1,693 Prior year UK corporation tax (180) (88) Current year deferred tax 3,876 (64) ------------------------------------------------------------------------------- 5,938 1,541 =============================================================================== Corporation tax is calculated at 30% (2004 - 30%) of the estimated assessable profit for the year. 3. Dividends Amounts recognised as distributions to equity holders in the period: 31 December 2005 31 December 2004 £'000 £'000 Final dividend for the year ended 31 December 2004 of 4p (2003 - 4p) per share 680 680 Special interim dividend for the year ended 31 December 2005 of 10p (2004 - Nil) per share* 1,274 - Interim dividend for the year ended 31 December 2005 of 5p (2004 - 4p) per share 850 680 ------------------------------------------------------------------------------- 2,804 1,360 =============================================================================== * A S Perloff waived his personal entitlement to the special 10p dividend. The Directors recommend payment of a final dividend of 5p per share (2004 - 4p). The final dividend will be payable on 27 June 2006 to shareholders on the register at the close of business on 26 May 2006. 4. Earnings per ordinary share (basic and diluted) The calculation of earnings per ordinary share is based on earnings, after minority interests, of £20,611,000 (2004 - £6,087,000) and on 16,998,151 ordinary shares being the weighted average number of ordinary shares in issue during the year (2004 - 16,998,151). 5. Net assets per share 31 December 2005 31 December 2004 £'000 £'000 Total equity attributable to shareholders per 25p ordinary share 398p 293p =============================================================================== 6. Investment Property Investment Properties £'000 Fair value of investment propert At 1 January 2005 87,812 Additions 631 Disposals (11,099) Revaluation increase 22,537 ------------------------------------------------------------------------------- At 31 December 2005 99,881 =============================================================================== 7. Annual General Meeting The Annual General Meeting will be held on 21 June 2006. 8. Copies of the Report and Accounts will be posted to shareholders shortly and will be available from the Company's registered office at Panther House, 38 Mount Pleasant, London WC1X 0AP. This information is provided by RNS The company news service from the London Stock Exchange

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