Final Results

Panther Securities PLC 16 June 2000 Results for the year ended 31st December 1999 CHAIRMAN'S STATEMENT Introduction I am pleased to present the results for the year ended 31st December 1999. Pre-tax profits were £2,056,000 compared to £3,236,000 for the year ended 31st December 1998. The results achieved are lower than those of last year, but it should be borne in mind that the 1998 results included the benefit of the profit on sale of our largest investment property whilst the current year bears the cost of approximately £550,000 in arranging and consolidating our new term loan, which is mentioned later in my report. Main Events In January 1999 we received a reverse premium of £812,875 in respect of dilapidations and the surrender of various leases in our office building at Elmbank Chambers, Glasgow. We were originally intending to refurbish the property and re-let the premises but are currently offering the freehold for sale on the open market. In June 1999 we acquired Northstar Properties Limited, Northstar Property Investment Limited and Northstar Land Limited. The Northstar portfolio of properties, which was valued for the transaction at £8,000,000, produces a rental income of £960,000 per annum. When we acquired these companies, we assumed existing bank loans of £5,560,000 and our actual cash outlay was approximately £2,260,000. This portfolio is performing to expectations. In July 1999 we sold 348 City Road, London for £375,000 which was 25% above its March 1999 valuation. In August 1999 we sold 9-11 St James Street, Nottingham for £1,100,000. This property was vacant and had been in poor condition for some time, yet the sale price was 26% in excess of the March 1999 valuation. In October 1999, after extensive refurbishment, we let 11,800 sq ft of offices at Neil House, Whitechapel Road, London E1 at a rent of £10 per sq ft, which is double the original rental value when we acquired the property in 1994. This letting gave an immediate saving of approximately £50,000 per annum in terms of vacant rates and service charges previously borne by the company. Panther House Redevelopment As I mentioned in my interim statement, we have had to revise our proposals for the redevelopment of our entire site following the local council's classification of Panther House, which occupies approximately half of the total site, as a building of special interest in a newly designated conservation area. We have already received planning permission for an extensive refurbishment of Panther House with a two floor extension. This permission is valid and remains unaffected by the conservation area limitations. The permission provides for a building with a gross floor area of 64,000 sq ft with a net floor area of 43,500 sq ft of office space. As the Grays Inn Road frontage contains no buildings of special interest, a new building is also being planned which could be linked to Panther House when refurbished. This revised scheme is taking longer than I would have liked, but it should eventually produce an acceptable proposal for the overall site. The Holborn/Clerkenwell area is one of the most sought after areas in London and we have a number of parties who have indicated interest in acquiring this development site. We are currently considering these proposals with our agents. Bristol Redevelopment In my interim statement I also mentioned that we have upgraded the scheme for our property at Bristol. The final size of the scheme has expanded and is now intended to comprise 100,000 sq ft, split as follows: 70,000 sq ft for a superstore with 400 car parking spaces, 20,000 sq ft mixed-use smaller units with some residential and 10,000 sq ft of community facilities which include a library/advice centre and meeting rooms. We hold a long lease on nearly half the site containing the majority of the existing shopping centre. The freehold of the site and the remaining area is owned by the local authority. I am pleased to say that we have received provisional planning permission. Due to the size of the scheme however there is a possibility that it could be called in for consideration by the Department of the Environment, although we are advised that this is unlikely because it is a brownfield site and our scheme does not significantly change the existing use of the site. Our proposals have the enthusiastic support of both the local authority and local community, who were closely consulted during all stages of the planning process. We have a few outside interests to acquire to enable the scheme to proceed, but as we have the co-operation of the local authority with its extensive facilitating powers we feel that in due course this scheme will proceed and could be very profitable for our group. Wynnstay Properties PLC Between October and December 1999 we increased our percentage shareholding in the ordinary shares of Wynnstay from 25% to 29.8%, which is just below the level at which a takeover bid becomes obligatory. Whilst we have built up our stake over the last few years at a significant discount to Wynnstay's stated net asset value, the company has produced only a modest performance in what have undoubtedly been extremely good years for the property industry. By way of example if we compare the period since we obtained our full listing in July 1994 and based on the audited results for the year ended 31st December 1993 as tabulated in the listing document, our net asset value has increased from almost £1 per share to £1.88 per share, an 88% appreciation. Since March 1994 Wynnstay's net asset value per share has declined from £2.12 to £2.07 per share as at March 1999 - a decline of 2%! We were concerned at this and requisitioned an Extraordinary General Meeting of Wynnstay requesting that the company liquidate its property portfolio with a view to becoming a cash shell company, which could have significantly improved prospects for all shareholders. Regretably, the shareholders turned down our proposals, seemingly on the basis that the directors informed them that they had a new strategy which was going to produce growth in the future. The inherent problems associated with Wynnstay's small size and its comparatively high management costs give me grave doubts that they will succeed in their aims. We will continue to monitor closely Wynnstay's management performance with the proper interest that a major shareholder should have in its investment. Other Investments Since the year end we have invested approximately £1 million in shares in quoted property companies where we will receive a dividend return equivalent to the bank deposit interest currently foregone. This return comes from companies where the dividends are well covered and the shares were purchased at more than 50% discount to their underlying net asset value. I find it surprising that sound, secure investment in property companies should be so lowly rated on the Stock Market, whereas companies with no more than a good idea (which could be copied) and a business plan can be valued at vast sums and, even more surprisingly in my opinion, some institutions appear to be reducing their exposure to safe and secure investments for the high risk glamour industries. Only time will tell which course is correct but I see that there has already been a substantial drop in the share prices of many high tech companies and there is still very high volatility in this market. For this reason alone I believe this decline has not yet ended. Finance In December 1999 we concluded a new seven year secured term loan with our main lenders, HSBC Bank plc, amounting to £25,000,000 on more favourable terms than previously enjoyed. The costs, (including legal and professional) and the payment of interest penalties for early redemption on other loans, totalled approximately £550,000. These costs, which are non-recurring, have been borne in the year under review. This new loan has resulted in additional cash of £5,000,000 which is available for investment. Early in 2000 we instructed Donaldsons, Chartered Surveyors, to revalue the Northstar properties, Panther House/Grays Inn Road and two other properties where circumstances have significantly changed since they were last valued. This produced a revaluation surplus of £3,734,000 and raises our net asset value to 182.0p per share, which does not take account of the additional 6p per share in stock property values in excess of their book value. Warrants In my Chairman's statement accompanying the interim results which were announced on 29th October 1999, I indicated that the Board was proposing to submit a resolution to shareholders and warrantholders at the next shareholders' meeting to extend the life of the warrants. During the second six months of the financial year to 31st December 1999, your Company's net asset value per share has risen to 188p (including an estimated additional 6p per share of unrealised surplus in trading stock) compared to 168p at 30th June 1999. Your Board has been advised that, under the circumstances, to extend the life of the warrants, which have an exercise price of 140p per share, by a further three years could represent a transfer of value from shareholders to warrantholders and so we have therefore decided not to extend the life of the warrants when they expire. Dividends An interim dividend of 2.5p per share was paid on 3rd December 1999 and we are recommending a final dividend of 3.5p per share for the year ended 31st December 1999. The total dividend for 1999 is held at the same rate as that for 1998, when the dividend was increased by 50% above the previous year. Prospects The property market is still buoyant both in terms of value and tenant demand and we are well positioned to take advantage of these circumstances. However, I have previously expressed my concern about the Stock Market and the potential repercussions on property companies should there be a severe Stock Market downturn and, for this reason, we maintain a high level of cash to enable us to take advantage of any special opportunities that may occur. Taxation Since 'New Labour' came to power in 1997 stamp duty on the purchase of all residential and commercial properties has been raised on three occasions. It is now 4% on all purchases over £500,000. This is an onerous and unfair imposition which is already having a detrimental effect on the liquidity of the market and commerce generally. It should be borne in mind that occupiers and owners of commercial property pay approximately £15 billion in commercial rates every year. Due to the complex rules, property companies are often unable to fully recover VAT. Development companies are often required, by increasingly tougher legislation, to provide substantial community benefits, including some much needed subsidised social housing, in return for the granting of planning consent. It has been shown that a number of Councils have requested benefits out of all proportion to the viability of a scheme, which results in developments being shelved and thus leaving derelict sites which remain a terrible scar on the landscape in our towns and countryside. Finally, large shareholders or employee shareholders in companies that invest, improve and develop properties, and subsequently retain them as investments, are not treated on the same basis as other investors as they do not obtain the favoured rates of tapered Capital Gains Tax announced in the last Budget. This discriminating treatment of property companies is typically 'Old Labour' policy. Taxation policy needs to be set by those with experience in the real business world! Malcolm Bloch Malcolm Bloch retired from the Board and active business life on 31st March 2000 to live abroad. In a separate document to be enclosed with the annual accounts we will set out our proposal to purchase his personal shareholding of 1,065,307 Ordinary Shares for £1.20 each for cancellation, which requires shareholder approval.Malcolm Bloch has been my business partner and friend for over thirty-five years and we have jointly built up this group. He has been a director since 1972 when we took over Levers Optical Company Limited which became Panther Securities PLC in 1980. All of us at Panther wish him well in his retirement and although we will no longer have his full time services, we maintain regular contact and he is always pleased to give advice. I will refer more fully both to his retirement and to our proposal to purchase his shares in the said document. Finally, I would like to thank all our staff and professional advisers for the wholehearted contribution they have given throughout the year. Andrew S. Perloff Chairman 15th June 2000 Date: 16th June 2000 For further information please contact: Andrew Perloff, Chairman Panther Securities PLC 020-7278-8011 Simon Courtenay City Profile Group 020-7726-8588 e-mail: sc@profilecomms.co.uk Peter Brookes City Profile Group 020-7726-8588 e-mail: pb@profilecomms.co.uk CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31st December 1999 Notes 1999 1999 1999 1998 £'000 £'000 £'000 £'000 Continuing operations Acquisitions Total Turnover 5,337 524 5,861 5,510 Cost of sales (941) (56) (997) (1,351) ------ ------ ------ ------ Gross profit 4,396 468 4,864 4,159 Administrative expenses (1,320) (26) (1,346) (763) ------ ------ ------ ------ Operating profit 3,076 442 3,518 3,396 Income from participating 64 - 64 80 interests Profit on disposal of 153 - 153 1,079 property ------ ------ ------ ------ Profit on ordinary activities before interest 3,293 442 3,735 4,555 Interest receivable 242 420 Interest payable (1,921) (1,739) ------ ------ Profit on ordinary activities before taxation 2,056 3,236 Taxation (503) (1,514) ------ ------ Profit on ordinary activities after taxation 1,553 1,722 Minority interests (9) (12) ------ ------ Profit attributable to members of the parent undertaking 1,544 1,710 Dividends 1 (1,085) (1,086) ------ ------ Retained profit for the 459 624 year Transferred from 805 2,716 revaluation reserve Purchase of own shares (41) - Retained profit brought forward 8,515 5,175 ------ ------ Retained profit carried forward 9,738 8,515 ------ ------ Earnings per share - basic 2 8.6p 9.5p - diluted 7.8p 8.9p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the year ended 31st December 1999 1999 1998 £'000 £'000 Profit for the financial year after taxation 1,553 1,722 Unrealised surplus on revaluation of properties and investments 3,892 3,840 ------- ------- Total gains and losses relating to the year 5,445 5,562 ------- ------- CONSOLIDATED BALANCE SHEET at 31st December 1999 1999 1998 £'000 £'000 Fixed assets Tangible assets 51,136 40,198 Investments 1,707 1,269 ------ ------ 52,843 41,467 ------ ------ Current assets Stock 4,812 4,816 Debtors: due within one 788 1,078 year Cash at bank and in hand 7,687 4,183 ------ ------ 13,287 10,077 ------ ------ Creditors: amounts falling due within (2,761) (4,000) one year ------ ------ Net current assets 10,526 6,077 ------ ------ Total assets less current 63,369 47,544 liabilities Creditors: amounts falling due after more than one year (30,379) (18,913) Minority interests (115) (131) ------ ------ Net assets 32,875 28,500 ------ ------ Capital and reserves Called up share capital 4,515 4,524 Share premium account 2,859 2,856 Revaluation reserve 14,384 11,297 Capital redemption reserve 281 271 Negative goodwill reserve 1,098 1,037 Profit and loss account 9,738 8,515 ------ ------ Equity shareholders' funds 32,875 28,500 ------ ------ Notes 1. Dividends The company has already paid an interim dividend of 2.5p per share (net) (1998: 2p (net) ) and the Directors now recommend payment of a final dividend of 3.5p per share (net) (1998: 4p (net) ). The final dividend will be payable on 31 July, 2000 to shareholders on the register at the close of business on 30th June, 2000. 2. Earnings per ordinary share The calculation of earnings per ordinary share is based on earnings, after minority interests, of £1,544,000 (1998 - £1,710,000) and on 18,033,295 ordinary shares being the weighted average number of ordinary shares in issue during the year (1998 - 18,038,013). The fully diluted earnings per share is based on 21,772,014 (1998 - 21,777,576) ordinary shares, allowing for the full conversion of the nil paid warrants and adjusted earnings of £1,704,000 (1998 - £1,930,000). Earnings have been adjusted by adding net interest deemed to be earned from 2 per cent. Consolidated stock on the proceeds of each theoretical warrant conversion. 3. Report and Accounts The financial information for the year ended 31st December 1998 is extracted from the group's financial statements to that date which received an unqualified auditor's report and have been filed with the Registrar of Companies. The financial information for the year ended 31st December 1999 is extracted from the group's financial statements to that date which received an unqualified auditor's report and will be filed with the Registrar of Companies in due course. 4. Annual General Meeting The annual general meeting will be held on 21st July 2000. 5. Copies of the Reports 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.

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