Panther Securities Regulatory News (PNS)

27 Apr 2006 09:00

Panther Securities PLC27 April 2006 Panther Securities P.L.C., the property investment company has today announcedits 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 recordresults. These annual figures are presented for the first time under the newInternational Financial Reporting Standards ("IFRS"), which accounts forinvestment properties revaluation surpluses being shown in the income statement,and also fully provides for deferred tax. Personally, I feel this to be aninappropriate way to present a property company's accounts, as it createserratic figures depending on values at the date of revaluation, and gives thefalse impression that these profits have been realised. Under the IFRS, our pre-tax profit is £26,549,000 for the year ending 31stDecember 2005 compared to a pre-tax profit of £7,632,000 for the year ending31st December 2004. The pre-tax profits shown previously under UK GAAP wouldhave been £3,995,000 for 2005 and £3,139,000 for 2004 - whichever acronym isused, for this year, record profits are produced. Most of this profit (under IFRS) comes from the revaluation of our entireportfolio of investment properties carried out by Donaldsons and CB RichardEllis. This produced an uplift of £22,537,000. They also re-valued our stockproperties, reporting a value of £4,136,000 in excess of their book value, whichis not incorporated in our accounts. Rental income receivable over the year fell from £9,100,000 to £8,097,000 due toproperty 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 officecomplex, Copthall House, Coventry, at a price of £9,250,000. This property wasproducing 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, andthroughout 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 wassold in January 2005 for £87,000 profit. Ramsgate We disposed of a small property in High Street, Ramsgate, which had been held astrading stock. This was sold at auction for £400,000, a figure well in excess ofits original cost. We still hold another property in High Street, Ramsgate, forwhich we are attempting to obtain planning permission for residentialdevelopment. 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 oftime, effort and money were put into producing a development scheme utilisingsome adjoining Council-owned land that would have been beneficial to the localcommunity - but the Council eventually wanted such a large amount of extraSection 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 auctionin separate lots. The local authority had been threatening to use theircompulsory purchase powers. However, they offered £1,000,000 for the centrewhich comprised thirty shops (mainly vacant) and upper parts whilst intimatingthey would press for a much lower figure at a CPO hearing. Negotiations had beentaking place in vain for some years. Upon learning of our intended actions, thelocal authority increased their offer eventually to £1,350,000. Even at thislevel they were unable to sign a contract and merely "promised" to use theirbest endeavours to proceed at that figure. We proceeded with the auction. If there is one thing I have learned over myforty years in the property business, it is that you cannot trust a localauthority, government body or any tier of their bureaucracy to proceed with anagreed matter unless it is bound contractually by a water-tight contract, andeven then, if large enough amounts are involved, the rules can be changed toenable 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, itstill produced a good profit as we had retained a cautious book value on theproperty 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 shopinvestments and part of the original Eurocity portfolio. Through our Scottishagents, we had managed to obtain a surrender of one unit, which was let but notoccupied, and simultaneously arrange for a new letting to the Bank of Scotlandon a 15 year lease. Both investments were then offered for sale at auction andsold 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 AIMlisted company, at a cost of £1,488,000, with one of my private companies havingone week previously purchased 14.5% at the same price of 13p per share. I wasshortly thereafter invited to and did join Hawtin's board. In June 2005 Hawtinannounced that it was in discussions with Panther which might or might not leadto an offer for Hawtin. Hawtin owns two substantial factory investments and 35acres of virgin land in Gwent, South Wales, the smaller part of which is zonedfor residential use and the larger part for industrial use, this use having amuch lower value than the residential use. We were unable to agree suitable terms to justify Panther making an agreed offerfor this company and this was announced on 10th November 2005. Very soonthereafter, we received an approach to purchase our holding. These negotiationswere successfully concluded in January 2006, when we sold virtually all of ourholding 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, thegreater part of which we received in part consideration of our sale to them ofEurocity (Crawley) Limited in May 2004. We are confident that in due course itwill show us a good profit. Elektron PLC Our holding is approximately 11.5% of this company which is performing extremelywell. Its profits have increased substantially and the company after three yearshas resumed paying dividends. ACQUISITIONS Due to the difficulty of finding fair value we only managed to buy one freeholdgeared ground rent in Nottingham, and one well-located freehold shop investmentin Plymouth, at a total cost of £600,000. Subsequent to the year end, a moresubstantial freehold shop investment let to HMV PLC was acquired for £900,000,situated close to the prime shopping position in Southend. Whilst only producinga 6% return, it does have medium term development prospects. FINANCE In December 2004 we concluded arrangements for a new £75,000,000 seven year loanfacility with HSBC PLC of which, at the year end, only £43,000,000 was drawndown and under which we could draw an additional £7,000,000 without providingextra 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 sharesat 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 Eurocityportfolio, namely 22-24 Westburn Street, Greenock, for £700,000 and 70 HighStreet, Elgin, for £583,000. Both of these prices were slightly in excess of thelatest valuations. DIVIDENDS A special interim dividend of 10p per share was paid on 28th June 2005, a secondinterim dividend of 5p per share on 28th October 2005, and your Board isrecommending 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 pershare will be paid at the same time as the payment of the final dividend for2005. The Board has decided to offer the facility of allowing dividends to be paiddirectly into shareholders' bank accounts. The authorities and details needed toenable payment in this way will be dispatched directly to shareholders by theregistrars with the next dividend payment. CHARITABLE DONATION In January 2005 we donated £10,000 to the Daily Mail Tsunami Relief Fund. Wefelt sure that all shareholders would have supported this proposal. Political Support Last year shareholders approved a resolution to donate £25,000 to theConservative party. Bearing in mind the present controversy over politicaldonations, I can assure shareholders the only title I have been offered is "mugof the year". Despite this, I have proposed the same resolution to contribute,and like previous resolutions on this subject, I will not vote my personalcontrolling shareholding. Whilst on the subject of voting, however, I would point out that when, in arecent 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 itcomes to voting. That is why political support is so important in order that aclear message can be promoted. OUTLOOK The property investment market is extremely resilient with huge extra demandproduced by private buyers extending their sights from residential investment tothe commercial sector, often financed with highly leveraged borrowing. My viewis that there is unlikely to be much rental growth due to the harsh tradingenvironment, particularly in the retail sector. Over the last year or so, wehave 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 mightbe tempted to say R.I.P. but, thankfully, they don't. These groups trade fromthousands of units and whilst many are resuscitated to be able to continue totrade in a reduced form, their suppliers, their banks, their landlords and theirshareholders nearly always lose out -this must have a detrimental effect onrental values over the medium term. We are not immune from the carnage on the High Street, but to date have sufferedlightly - having only a small number of units vacant because of bankruptcy orinsolvency, and whilst we continue to receive rent from administrators orsuccessors, some units are now occupied in a less secure format, as allowed forunder 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 isproving difficult to find attractive opportunities to invest our substantialfunds, 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 helpme 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 hasnot changed in over thirty years. Utilising our experience in the real estatesector and related fields, it is to make as much money (real profits) aspossible, and grow the net assets of the company with the capital we haveavailable to us, always mindful of careful limitations on the risks involved. Ifeel we have been successful in that regard, for in the last 25 years (since wechanged to purely property) our net assets have grown from 2p to over 400p pershare. This ignores the fact that over the past 23 years we have paid risingdividends 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 financialadvisers, legal advisers, agents, accountants and, of course, our tenants - toall of whom I am grateful. As ever, despite the many uncertainties, I view our future with optimism andconfidence. 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 weall 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 thedevastating problems brought about by an incompetent and self-interestedadministration, 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 planningapplication. One planner had wanted a modernist approach, but when a new officertook over, a traditional style building was stipulated; then the personnelchanged and the result - a more modern facade was once again in favour; havingphoned 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 theapplication to redevelop my own home. Building new for old is normally aformality. Beside the usual delays, I had the added problem that a bat hadvisited my home. I was thus forced to have a series of bat surveys throughoutthe summer period, which delayed the decision-making process by a further 10months, the surveys being carried out at dusk on four occasions, by two youngstudents with binoculars and a bat ray gun, which could pick up the bat's vocalcommunications and differentiate the tones to see if it belonged to a rare orless rare species of bat. I am pleased to report that the bats were not living at my residence, but merelycruising my road en route elsewhere. Towards the end of their report the authorsstated that it was unlikely that the bats would settle in my rafters due to thehigh level of exterior lighting that existed. The exterior lighting (forsecurity purposes) has not changed for many years - if the council were notforced to forever cover themselves by the politically correct lobby, they couldhave decided that the surveys would have been unnecessary from the word go! More interesting was what happened at the planning committee meeting, which Iattended. The committee of five counsellors sat facing six council employee officers withthe interested general public seated further down the room, any of whom couldpre-register to speak to the committee about any planning matter on the agendajust prior to its consideration. I had been told that my application was being recommended, so that I did notneed 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 ratherminor, such as side extensions, conversions of upper part of shop into twoflats, etc. One application was apparently quite simple; a planning permission renewal for 8residential units and a new scout hut replacing the old scout hut, but taking upless 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 theplanning officer why, in view of the serious shortage of homes in the area, theCouncil had not dealt with the development earlier within the original five yearperiod allowed. An ostensibly, more experienced and older Council employee,probably from their "spin" department, answered, or should I say, failed toanswer, the question, offering a long oration about the need for homes, and notlooking 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 charmschool, 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 puttogether. The planning officer was very good at explaining at length that, although myapplication was bigger than most of the single house applications in the area,(representing an increase in size of approximately 10%), he nevertheless feltthat because of the height reduction, the fact that the property was set back afurther 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 theapplication for approval. There were photos and photo slides of the plans, andafter a number of questions, about trees and access, it was about to be put tothe vote. A young woman on the council employees' table, who chaired the entire meetingand was probably the council's legal secretary - prior to putting my applicationto the vote said - "Speaking for myself, I think this building is hideous". Iwas fuming that this "Marxist", who should have been neutral, should express anopinion. I was about to jump up and have my say about taste - but my instincttold me that the majority of the councillors would approve my application and mystory may not have helped, so I remained silent. My application was approvedunanimously. However, the story I would have told them may interest and amuse myshareholders. Some twenty five years or so ago, I went on holiday to the Far East, with threeother not-so-young single men. The weather was good, the food different and thenight-life exciting. One night my friends and I went to the top night club inthis seaside resort. The club had a live band with a beautiful and curvaceoussinger with long black hair in an expensive ball gown, who sang many oldstandard songs, in English. The youngest member of our group struck up afriendship with the singer, and by the end of the evening, after much dancing,champagne cocktails and little conversation (it was so noisy there), theentertainer 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 therest of us. We arrived at our hotel and, as we entered, the ever-vigilantmanager rushed up to my friend and stated that his new friend could notaccompany him to his room. Asked why, he was told he had only paid for a singleroom, and an additional person in the room would cost an extra £15. My friendwas in no mood or state to dissent or haggle, so he signed a chitty. We thendisappeared 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 wasthere, dishevelled as was his "new friend", but gone was his wonderful tan - helooked green. He shouted to me - "She's a He, She's a He!" and promptly escortedher/him down and out of the hotel. It was when I got downstairs that I found myfriend (having regained his composure) arguing with the manager - he wasexplaining the situation and demanding his £15 chitty back. In the course of thediscussion, the manager said "Of course I knew that she was not a lady". "Whydidn't you tell me?" my friend shouted. I recall to this day, the manager'sdeferential 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 sowrong in this country - elected officials always seem to want to impose theirown 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 whatspeed, what vaccinations we must take, what education our children must receive,whom we employ or dis-employ, where we get our medical treatment, what treatmentwe are allowed, what sports we should pursue, etc, etc. Of course, the management and often the enforcement of these restrictions areall paid for by the taxpayer, and usually by those who need the least help inthese areas. A little while ago, I received a short standard form advising me that havingjust turned 60 I was entitled to a £200 winter heating allowance. The form hadmy correct address (and postal code), date of birth, national insurance numberand 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 andsent it back, looking forward to receiving the cheque, which would have beenframed and hung on the wall in a prominent position, as being the only financialgift I had ever received from government. When the DHSS letter arrived, Ieagerly opened it, only to find another form stating that I had not sent in myoriginal birth certificate and advising that I should obtain one and send it orgo to the job centre, where they would copy it, authorise its authenticity andthen 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, whichfor many years have been in eye-watering huge amounts, not once but twice a yearon top of the monthly deductions taken out of my salary before I see it. Notonce during these last 40 years have I ever been asked to show my birthcertificate before they demanded money - perhaps I might be able to claim it allback! Some hope! It seems once again opportune to underscore my point that any government handoutis deliberately organised in a manner to create as much extra wasteful expensivecivil service employment as possible, ie, DHSS form sender, post office,registrar of births, deaths, jobcentre copier. Why not a simple computergenerated 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 wastein central and local government that I lose sleep. Not often, but the othernight I had a wonderful dream.......... I dreamed that I was twenty years younger, six inches taller and two stonelighter, and spoke with the eloquence and good humour that usually comes from aneducation at one of our better public schools. After one year of tele-visual presentation promising improvements in everybody'squality 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 housingmore affordable but not lowering the value of people's homes and creating everyother possible benefit and class of beneficiary, I was, of course, the onechosen to implement the changes. Standing upon the steps of Downing Street, I issued my Mission Statement; nolonger would we be a welfare state, a state of supplicants, claimants, statedependants and litigants - but we would become a well-off state, where everyonewas capable of living a healthy, comfortable and caring life through their ownand their families' efforts; one where the state's interference in everyone'sdaily life would gradually disappear; and where respect for the teachers,police, the justice system, your elders and even possibly politicians, wouldreappear. My policies would all be based on two premises - simplification and a factor ormultiple 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 allpersonal incomes above £15,000 per annum. There would be no differentiation asto source of income and no allowances other than the new special allowances Iwould grant. Tax credits would be abolished, unemployment benefit and disability benefitwould be aligned at one rate being the current average of both rates. Theseverely disabled would be further assisted under the much improved healthservice 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 ofownership. There would be no other reliefs whatsoever (other than for earlierlosses). Amnesty would be granted to all of the approximate 100,000 tax exiles who wishto come back to our shores under our new and enlightened tax regime. This willproduce a minimum £5 billion additional revenues. Inheritance Tax would be payable at 15% on all estates over £300,000. Therewould be no reliefs, although all estates would have between 5 and 10 years topay (at base rate interest) depending on whether the estate's assets wereilliquid 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 asunder 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 ofNil to 5% could be charged by county-based authorities with a view to reducingthe council tax payable. Rates for commercial properties would be reduced by15%, and vacant rates payable at 15% of the full value. All previous pensioner inducements such as heating allowances and grants wouldbe 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 payat 75% of the normal rate and 50% when over 80. The cost-saving measures I would implement to allow for the benefits proposedare as follows:- All persons whose salary is derived directly from the state, including localauthority, education, health authorities etc, will in future be paid net of taxat the rates they are currently being paid under the old tax system. It will betreated as tax free income, and restricted to inflation-indexing for threeyears. This is so that only private sector workers can benefit from the taxcuts. I envisage many public employees would welcome the changes because anyadditional 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 aMillennium Commission with 994 years to go?), and the remainder investigated tosee if they are really necessary, with a view to abolishing them all within ayear. A referendum would be held on whether we pull out of the European Union, andagree a free trade area with the EU - this would save about £9 billion perannum, (I have assumed the result would be yes) £1.5 billion p.a. of which wouldbe allocated to industries that might suffer, in particular our farmers andfishing 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 relatingto ethnic diversity and cultural integration would thus be closed down. All regulations to do with employment rights, health and safety, disabilitydiscrimination etc, would be watered down to practical levels and waived forcompanies that employ less than 100 people. Small companies have a bettercommunication and liaison with their employees, and legislation is unnecessaryand only serves to disturb rapport. Public sector employment would initially be reduced by at least 15% over a fiveyear period, mostly by natural wastage. The massive savings expected would allowfor my change in the tax system. The changes so far presented would probably produce over 500,000 less employeesin the public sector within five years - a saving of £25 billion a year inrunning costs. I would expect most of them to find employment in the revitalised privatesector, whose GDP would grow at 3% per year above the norm for the next fiveyears, producing and adding an extra £20 billion per annum to governmentrevenue, 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, allspeed limits would be raised by 15% - local authorities would remove 50% of allhumps and bumps, and to further improve road safety, 50% of speed cameras on theindependently assessed least dangerous roads would be temporarily covered andbus lanes abolished. Local authorities would be forced to bring traffic wardensback under their direct control, employing no more than 30% of those currentlyemployed. Any person caught speeding where there is no question of seriousdanger, or involving an accident, will have a valid defence if more than 25% ofpolice officers/councillors or MPs or their drivers have been caught on cameraor 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 onlydisplay road tax discs but also an insurance cover disc which must tally withthe car and owner. Users of uninsured and untaxed cars will receive more severefines. On a second conviction of intent to fail to pay, cars would beconfiscated for a period of months. Road improvements would only be carried out after careful consultation with thecounty and adjoining county co-ordinating department. Works contracts will havea shorter time allocated so as to reduce disruption times. Crime A referendum would be held as to whether a re-introduction of the death penaltyshould be brought in for premeditated murder and/or murder in the course of aserious premeditated crime. To encourage proper policing, the top 10% senior police officers per countywould receive 20% pay bonuses, allocated annually, by the police committee ofthe local authorities. The three most senior policemen in each county wouldstand for election on their record every five years. Police forces would bemodernised with more civilian employees taking on backroom office functions andunnecessary form filling would be scrapped and methods would be found to preventthem wasting time hanging round courts which will be made more efficient.Likewise, the top five posts in the Crown Prosecution Service would be electedevery five years. All prosecutions would be subject to my new law called the"common sense law", which would prohibit prosecutions that to the general publicwould seem ridiculous, ie car splashing a policeman, calling someone a rudename, 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 juryof 15 locally selected council tax payers, who all sit for one week and considerthe Crown Prosecution proposed cases (with anonymity for the people concerned),and cases which the jurors considered not "common sense" by a majority decisionwould be dropped. 15% extra prison places would be built and all criminals will serve their fullsentences. 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 (includingbusinesses, family and employees) and criminals would lose rights to sue iftheir claims occurred in pursuit of a crime. Education All state run schools would be turned into local associations, with parentshaving control of the local governing board. They will be able to charge fixedrate fees (minimum and maximum) adjusted annually. All parents would be issuedwith vouchers for the average education charge which can be used at any schoolof their choice. It will be the parents' responsibility to get their children totheir school of choice. The school board will choose the curriculum, school hours and holiday dates. Aschool can become a specialist school if local demand desires it. The onlyobligation would be that they teach the six Rs - reading, writing, 'rithmetic,reliability, responsibility and respect, to an agreed standard. All schoolswould have their own individual uniform, which all children would be proud towear. Corporal punishment under the schools' rules would be encouraged.Prosecutions against teachers would have to pass a test of seriousness andprobability before being considered for implementation. Violence againstteachers 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 separatecorporations and sold off. Everybody would be given full insurance cover to payall medical bills which the government would purchase using its ability tonegotiate in a free market. Everybody who is legitimately on the record wouldreceive an annual insurance certificate which they could take to the hospital oftheir choice or doctor's recommendation or shop around for the most suitablefacility for timing or location, and on presentation of their certificate, theappropriate insurance company would be billed and pay direct to the hospitalcorporation. There would be special arrangements for emergency treatment. Most insurance companies would be interested in both the combined hospitalownership and insurance, confident in the knowledge hospitals can be run moreefficiently and thus profitably. Hospital campuses would be excluded fromplanning rules so that nurses' and doctors' accommodation could be built quicklyon the campus. Everyone visiting a doctor who was not in employment would pay £10 with a limitof paying this four times a year. Under my new tax incentive rules, working for a living would be so much morefinancially rewarding than social security/disability benefits, the nation wouldsee a miraculous improvement in the nation's health and relieve pressure ongeneral practitioners. At least 1,000,000 people would recover from theirailments - a massive saving on our social security payments. Immigration Whilst I would welcome a fair degree of immigration, it would be carefullymonitored and controlled to allow painless integration into the community. 30%of the traffic wardens made redundant in my traffic improvement measures wouldbe taken on as immigration inspectors and paid a commission on each illegalimmigrant they catch. With the excessive zeal shown in their previous job andtheir ability to blend into the background until an opportune moment, and mostimportantly, 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 andplanning systems; Gordon Brown to Zimbabwe to assist President Mugabe in hisefforts of furthering redistribution; and John Prescott to Hollywood in a remakeof "On the Waterfront" and cast as Terry Malloy. By the way, the Blairs had to sell their property portfolio at a huge loss andretired to Tuscany in a villa provided by a recently and forcibly retiredforeign friend. I was having such a nice dream, and I awoke, looked out of my window and saw itwas a beautiful sunny day with lots of small clouds, when I was suddenly awareof 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 9,194Cost of sales (2,035) (1,487)------------------------------------------------------------------------------- Gross profit 6,463 7,707Other income 133 98Administrative expenses (2,061) (1,988)------------------------------------------------------------------------------- Operating profit 4,535 5,817Profit on the disposal of investmentproperties 1,608 527Movement in fair value of investmentproperties 22,537 4,714Finance costs (3,281) (3,996)Investment income 877 408Profit on disposal of available for saleinvestments (shares) 87 43Profit on sale of subsidiary 66 82Surplus of assets acquired overconsideration given 17 -Income from associate 103 37------------------------------------------------------------------------------- Profit before tax 26,549 7,632Income tax expense (5,938) (1,541)------------------------------------------------------------------------------- Profit for the year 20,611 6,091=============================================================================== Attributable to:Equity holders of the parent 20,611 6,087Minority interest - 4------------------------------------------------------------------------------- Net profit for the year 20,611 6,091===============================================================================Earnings per shareBasic and diluted 121.3p 35.8p=============================================================================== CONSOLIDATED BALANCE SHEETAs at 31 December 2005 31 December 31 December 2005 2004ASSETS £'000 £'000Non-current assetsProperty, plant and equipment 9 9Investment property 99,881 87,812Interests in associate 364 260Available for sale investments (shares) 3,047 3,419------------------------------------------------------------------------------- 103,301 91,500------------------------------------------------------------------------------- Current assetsStock properties 9,534 9,755Available for sale investments (shares) 410 323Trade and other receivables 3,196 4,263Cash and cash equivalents 14,546 15,337------------------------------------------------------------------------------- 27,686 29,678------------------------------------------------------------------------------- Total assets 130,987 121,178=============================================================================== EQUITY AND LIABILITIESEquity attributable to equity holders of theparentCapital and reservesShare capital 4,250 4,250Share premium account 2,886 2,886Capital redemption reserve 571 571Retained earnings 59,925 42,164------------------------------------------------------------------------------- 67,632 49,871Minority interest - 94------------------------------------------------------------------------------- Total equity 67,632 49,965------------------------------------------------------------------------------- Non-current liabilitiesLong-term borrowings 46,562 58,925Deferred tax liabilities 11,010 7,154------------------------------------------------------------------------------- 57,572 66,079------------------------------------------------------------------------------- Current liabilitiesTrade and other payables 4,350 3,845Short-term borrowings 187 210Current 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 EXPENSEFor the year ended 31 December 2005 Year ended Year ended 31 December 31 December 2005 2004 £'000 £'000Movement in fair value of available forsale investments (shares) taken to equity (66) 786Deferred tax relating to movement in fair valueof available for sale investments (shares)taken to equity 20 (236)------------------------------------------------------------------------------- Net (expense) / income taken directly to equity (46) 550Profit for the year 20,611 6,091------------------------------------------------------------------------------- Total recognised income and expense forthe year 20,565 6,641===============================================================================Equity holders of the parent 20,565 6,637Minority interest - 4------------------------------------------------------------------------------- 20,565 6,641=============================================================================== CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 December 2005 Year ended Year ended 31 December 31 December 2005 2004 £'000 £'000Cash flows from operating activitiesOperating profit before interest,investment income and tax 4,535 5,817Add: Depreciation charges for the year 9 14Add: Write down of available for saleinvestments (shares) - current assets 12 -------------------------------------------------------------------------------- Operating profit before working capitalchanges 4,556 5,831Decrease / (increase) in stockproperties 221 (967)(Increase) / decrease in receivables 1,067 1,416Increase / (decrease) in payables 329 1,080------------------------------------------------------------------------------- Cash generated from operations 6,173 7,360Interest paid (3,105) (3,999)Income tax paid (1,896) (1,353)------------------------------------------------------------------------------- Net cash from operating activities 1,172 2,008------------------------------------------------------------------------------- Cash from investing activitiesPurchase 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 investmentproperty 12,707 9,490Proceeds from the disposal of availablefor sale investments (shares) - noncurrent assets 399 830Dividend income received 37 45Interest income received 840 360------------------------------------------------------------------------------- 13,225 7,798------------------------------------------------------------------------------- Cash from financing activitiesNew loans net of repayments (12,384) 4,447Dividends paid (2,804) (1,360)------------------------------------------------------------------------------- (15,188) 3,087------------------------------------------------------------------------------- Net (decrease) / increase in cash andcash equivalents (791) 12,893------------------------------------------------------------------------------- Cash and cash equivalents at thebeginning of period 15,337 2,444-------------------------------------------------------------------------------Cash and cash equivalents at the end ofperiod 14,546 15,337=============================================================================== RECONCILIATION OF THE OPENING POSITION PER UK GAAP AS PREVIOUSLY REPORTED TOIFRS AND CHANGES IN EQUITYFor 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 January2005 (under UK GAAP) 4,250 2,886 27,515 783 19,554 54,988Changes in accounting policy:a. Negative goodwill - - - (212) 783 571b. Deferred tax - - - - (7,154) (7,154)c. Accrued dividend - - - - 680 680d. Shares carried atfair value - - - - 786 786e. Revaluationreserve - - (27,515) - 27,515 --------------------------------------------------------------------------------------------- Balance at 1 January2005 (under IFRS) 4,250 2,886 - 571 42,164 49,871 Movement in fairvalue of availablefor saleinvestments (shares) - - - - (66) (66)Deferred taxrelating to movementon fair value ofavailable for saleinvestments (shares) - - - - 20 20Profit for the year - - - - 20,611 20,611Dividends paid - - - - (2,804) (2,804)--------------------------------------------------------------------------------------------Balance at 31December 2005 (under IFRS) 4,250 2,886 - 571 59,925 67,632============================================================================================ NOTESTO THE RECONCILIATION OF THE OPENING POSITION PER UK GAAP AS PREVIOUSLY REPORTEDTO IFRS AND CHANGES IN EQUITYFor the year ended 31 December 2005 a) Under International Financial Reporting Standards (IFRS), any negativegoodwill arising is required to be taken to the Income Statement. This hasresulted in an increase in retained earnings by £783,000 under IFRS compared toUK GAAP. b) Under IFRS, deferred taxation is required to be recognised on revaluationgains arising on investment properties. This has resulted in an increase in thedeferred taxation provision of £7,154,000 under IFRS compared to UK GAAP. c) Under IFRS, dividends declared after the balance sheet date should not berecognised as a liability at the balance sheet date. This has resulted in anincrease in retained earnings by £680,000 under IFRS compared to UK GAAP (prioryear). UK GAAP rules have recently changed so that the accounting treatment isnow consistent with IFRS's regarding the treatment of declared dividends. d) Under IFRS, gains and losses arising on revaluations of available for saleinvestments (shares) are taken directly to reserves as part of retainedearnings. This has had an effect of increasing retained earnings by £786,000under IFRS compared to UK GAAP. e) Under IFRS, gains and losses arising on revaluations of investment propertiesare 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 IFRScompared to UK GAAP. NOTESTO THE PRELIMINARY ANNOUNCEMENTFor the year ended 31 December 2005 1. General Information While the financial information included in this preliminary announcement hasbeen prepared in accordance with International Financial Reporting Standards(IFRS's), this announcement does not itself contain sufficient information tocomply with IFRS's. The Company expects to publish full financial statementsthat comply with IFRS's in May 2006. The financial information set out in the announcement does not constitute thecompany's statutory accounts for the years ended 31 December 2005 or 2004. Thefinancial information for the year ended 31 December 2004 is derived from thestatutory accounts for that year, which were prepared under UK GenerallyAccepted Accounting Principles (GAAP), which have been delivered to theRegistrar of Companies. The auditors' opinion on those accounts was unqualifiedand 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 onthe basis of the financial information presented by the directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the company's annual general meeting. In the year ended 31 December 2005, all European Union listed companies arerequired to prepare consolidated financial statements using IFRS. The group hasadopted all of the new and revised standards and interpretations issued by theInternational Accounting Standards Board (the IASB) and the InternationalFinancial Reporting Interpretations Committee (IFRIC) of the IASB and endorsedby the European Union that are relevant to its operations and effective foraccounting periods beginning on 1 January 2005. These changes were explained inthe 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 1,693Prior 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 assessableprofit 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 31December 2004 of 4p (2003 - 4p) pershare 680 680Special interim dividend for the yearended 31 December 2005 of 10p (2004 -Nil) per share* 1,274 -Interim dividend for the year ended 31December 2005 of 5p (2004 - 4p) pershare 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 theregister 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, afterminority interests, of £20,611,000 (2004 - £6,087,000) and on 16,998,151ordinary shares being the weighted average number of ordinary shares in issueduring the year (2004 - 16,998,151). 5. Net assets per share 31 December 2005 31 December 2004 £'000 £'000 Total equity attributable toshareholders per 25p ordinary share 398p 293p=============================================================================== 6. Investment Property Investment Properties £'000Fair value of investment propert At 1 January 2005 87,812Additions 631Disposals (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 andwill be available from the Company's registered office at Panther House, 38Mount Pleasant, London WC1X 0AP. This information is provided by RNS The company news service from the London Stock Exchange