Panther Securities Regulatory News (PNS)

30 Apr 2007 07:03

Panther Securities PLC30 April 2007 Panther Securities PLC, the property investment company has today announced itsfull year results for the year ended 31 December 2006. CHAIRMAN'S STATEMENT Introduction I am pleased to report excellent profits for the year ending 31st December 2006,which amounted to £9,269,000 (before tax) compared to £26,549,000 (before tax).In 2005 there was a larger revaluation surplus of £22,537,000, as against£6,081,000 in 2006. Rental income receivable over the year fell from £8,099,000 in 2005 to£7,510,000, due to our deliberate and continued policy of selling some of ourmature investments. Disposals To this end we have been selling the majority of the investments that came withthe acquisition of Eurocity Properties PLC in 2002. Whilst there has been littlerental growth since that time, yield compression has generated good profits overtheir then cost. During the year under review, we have sold 22 Westburn Street,Greenock; 70 High Street, Elgin; 30 High Street, Paisley and 206/208 MainStreet, Barrhead. The total sales proceeds were £3,357,000 which was well abovelast December 2005 valuation. In February 2006, we sold virtually all of our Hawtin PLC shareholding, whichgave us a profit of approximately £480,000. Shareholders may recall that weacquired 15% of Hawtin PLC at a cost of £1,488,000 in June 2004. A year later(June 2005), we started discussions with Hawtin's board with a view to ourmaking an agreed offer for the company. By November 2005, it was announced thatan agreement could not be reached. Shortly thereafter, we were approached by aprospective purchaser for our holding, the sale of which was successfullyconcluded in February 2006. We purchased Hawtin at 13p per share and sold themajority of our shares at 181/4p per share - a good profit. The balance was soldlater in the year at a slightly lower price. The overall profit on these shareswas £497,000. In November 2006, we submitted our freehold parade of shops in Victoria Street,Wolverhampton for sale by auction as individual shop units. This property waspotentially subject to a Compulsory Purchase Order and we preferred not to wait.We sold approximately half the parade for a total of £1,025,000. This propertywas held as trading stock and shows a good profit on cost. We expect the balanceof the property to be sold either by way of Compulsory Purchase or privatelywithin the course of the next year. Acquisitions In March 2006, we bought a freehold property in Queens Road, Southend-on-Sea,for a total cost of £990,000. It comprises a quadruple shop and upper parts ofover 11,000 square feet, close to the High Street, which is the prime retailarea and is let to HMV PLC on a lease that expires in one year's time. Thecurrent rent is £57,000 per annum. In June 2006, we acquired a freehold double shop and upper parts at 182/184Northdown Road, Cliftonville, Kent. It is close to some of our existingproperties and was acquired at a cost of £410,000. This is let to W H Smith PLC,who entirely sub-let at a profit rent. In the same month we acquired the freehold shop and upper parts at 25 GuildhallStreet, Folkestone, for approximately £232,000. It is sited between 21/23 and 27Guildhall Street, Folkestone, which are properties we have owned for some time.We are in the final stages of a major rebuild of No 27 to provide thirteenresidential units in the upper parts. We have also converted the upper part ofNo 23 into three self-contained residential units. The residential propertiesare currently being marketed for sale and should achieve a respectable profit oncost. In July 2006, we received planning permission for twenty flats on our freeholdsite at High Street, Ramsgate, and are currently investigating the mostprofitable way for us to deal with this asset. Investments Elektron PLCWe continue to retain our substantial holding in Elektron PLC, who recently tookover another small AIM Listed company. Their acquisition enabled us to purchaseand leaseback factory property in February 2007, which I will mention later. Real Estate Investors PLCWe continue to hold our investment in this AIM Listed property company, indeedit was increased when we accepted £200,000 worth of their shares as part paymentfor the property in Paisley which we sold to them for £1,100,000 August 2006.Currently REI's shares are quoted in the market in excess of our cost. M.R.G. Systems LimitedThis company, which I mentioned in my Interim Statement, is now classed as asubsidiary company as we now own 72%. This year has seen a loss of £177,000, butwe hope for a recovery in the year ending 31st December 2007. We give moredetails within the Operating and Financial Review and within the notes to thestatutory accounts. Finance Loan FacilityIn September 2006, we entered into new swap agreements which came into effect inDecember 2006 as follows: £50 million of the loan facility was previously fixed at 5.29% (plus the bank'smargin) until 2011. The Group entered into swap agreements, at no cost to theCompany, with £25 million of the loan facility fixed at 4.9% (plus the bank'smargin) until 2021 and a further £25 million now fixed at 4.63% (plus the bank'smargin) until 2011, with HSBC having the right at the end of this period toextend the latter swap agreement at 4.63% for a further 10 years. Thesearrangements will reduce annual interest costs by approximately £260,000 in2007. We felt much of the investment property offered to us was unable to producesufficient return or prospects, and thus we were not fully utilising the £75million loan facility arranged in 2004. The loan facility had a commitment feeof 0.5% per annum on the unutilised balance. Therefore we reduced the availablefacility by £32.5 million to £42.5 million from February 2007, at no penaltycost, reducing the future annual commitment fee payable by £160,000. Of the remaining £42.5 million facility, £7.5 million remains undrawn andavailable without providing additional security. Whilst it is, of course, irritating to pay facility and legal fees for financearrangements that are then cancelled, I have no doubt that should we requireextra finance, it could be arranged quickly. The Board consider it better tosave money now. Post Balance Sheet Events In February 2007, we purchased four freehold factories, occupied by recentlyacquired subsidiary companies of Elektron PLC, for a cash consideration of£4,600,000 (including purchasing costs) and entered into leaseback arrangementsat a total annual rental of £343,500. These factories have a total net lettablearea of 120,000 square feet on seven acres of land. 14,000 square feet arevacant, with the potential for an additional rental income of £50,000 per annum,and are situated at Tenbury Wells, Worcestershire; Princes Risborough,Buckinghamshire; and Clacton-on-Sea, Essex. In February 2007, we sold at auction the following properties, most of whichsales have now been completed: 191-199 Rushey Green, Catford, London; HaintonHouse, Hainton Square, Grimsby; 74 Kilmarnock Road, Glasgow; 63/65 High Street,Dumbarton; Unit 1, 4 High Street, Paisley; and Unit 2, 4 High Street, Paisley. These properties, which were producing £246,000 per annum, were sold for grossproceeds of £4,986,000 and the Group expects the profit on disposal to beapproximately £1,250,000 in excess of the total values as shown in theseaccounts. General Overheads Overheads include £460,000 paid to me, £350,000 of which was the third yearfinal bonus that was paid to enable my salary to catch up with the success of mypersonal pension fund and thus enable me to receive my full entitlement. Ipreviously waived over £400,000 in dividends, but, as a further act of penancefor having taken so much, I am waiving my salary for this current year, and Iconsider this a symbolic tax strike, which I hope others will follow. This will reduce the Company's overheads by £519,000, but also reduce theExchequers 'Income and NIC' tax take by £243,000. Dividends An interim dividend of 6p per share was paid on 26 June 2006, and your Board isrecommending a final dividend of 6p per share (making a total of 12p per share),for the year ending 31 December 2006. In view of the current year's progress, we propose to pay an interim dividend of6p per share which will be paid on 28 September 2007. Political Donation Once again I have requested that a resolution be presented to shareholders todonate £25,000 to the Conservative Party as I consider they are likely to bemore beneficial for business than the current administration who have once againsurreptitiously introduced an effective stealth tax by removing property reliefon all vacant commercial properties from next year. I of course will not vote mypersonal interest on this resolution. Prospects In the mid 70s, when I was a young man making my way in the property world, Iwas taking a short holiday at a family hotel in Bournemouth. The friendly andcasual atmosphere meant we often sat with strangers for our meals. One suchafternoon at tea, whilst sitting with an elderly couple, I was asked whatbusiness I was in. I explained I was an estate agent and aspiring propertydealer. My new found friends pointed across the room and said "That man overthere owns £100 million pounds worth of property". "WOW!" I replied, you mustremember that at that time a four bedroom detached house in most parts of Londoncould be purchased for £25,000 or alternatively a small flat in Fulham wouldcost £5,000. I was truly impressed - however, I then thought about it andpointed out to my new friends that I had noticed that that particular guest overthe last week was the most miserable and depressed looking person in the hotel -"Ah yes" they said, "he has a small problem, he owes £200 million pounds" andindeed within a year this man had made headlines as England's biggest personalbankrupt. There was no question of fraud, he had merely bought at top marketprices and borrowed heavily from many different sources wherever he could andwas being wiped out when interest rates went up and property values down andsome of the lenders wanted and needed their money back. A further story I recall being told is that if a frog jumps into a pot of veryhot water, it immediately reacts and jumps out and no harm comes to it. However,if it jumps into a pot of cool water that is being heated slowly to boilingpoint, it is unable to sense the continuing small changes and eventually getscooked to death. I fear this is what is happening to many highly borrowedinvestors with rising interest rates and, like the frogs, will finish up as"Grenouilles en Beurre" - or as we say over this side of the Channel, "in thesoup". Whilst it is the Board's view that the commercial and residential market mayhave reached a peak we consider that we are in an extremely sound and liquidfinancial position to take advantage of any interesting opportunities that maycome our way. Once again I have separated my personal ramblings which follow this statementand are not strictly related to our operations so that those shareholders whoare not interested in my views can ignore them. Finally I would like to thank our small dedicated team of staff, our financialadvisers, legal advisers, agents, accountants and, of course, our tenants - toall of whom I am most grateful. As ever, despite the many uncertainties, I view our future with optimism andconfidence. A. S. Perloff Chairman30 April 2007 CHAIRMAN'S SUPPLEMENT The Ten Commandments! Sometimes it helps to consider what was written in the Bible to see if it hasany relevance to modern times. An interesting story is told in Exodus of Moses,who led 600,000 of his people out of bondage in Egypt when ruled by Pharaoh. After much travel through deserts, waste and barren lands, Moses reached thefoot of Mount Sinai, upon whose peak God sat and He ordered Moses to come up. Iimagine the meeting going something like this. Moses: "Oh Great and Mighty God I prostrate myself before Thee to give thanksfor freeing my people from slavery in Egypt, for providing sustenance in thewilderness, for guiding us though deserts, for defeating Pharaoh's armies,for..... God: "Oh, Mo, Mo, enough! Stop the lauding. I know what I've done for my peopleand although I am mighty pleased with the fine job you've done under my guidance-what do you want NOW?" Moses: "My people have been slaves for a hundred years, they only know aPharaoh's edicts - they do not have their own laws to allow them to live inharmony with each other. They love and fear Thee, so can the Almighty bless uswith some of our own laws. But oh mighty one, my people are a simple people who,as slaves, had no time for education or learning table manners!" God: "OKEY DOKEY Mo, I get the gist - education, education, education. So thatyour people are not hit by my most fearsome 11th plague which I did not need touse on Pharaoh, I will give you just 10 Commandments, each simple to understand,but all encompassing for a happy and good life between man and his neighbour. Iwill set them in stone as a sign that they will be everlasting. Take them downto our people and teach them the wisdom of My words! Well, Moses did just this, and for the next three and a half thousand years orso, most of human civilisation lived by these laws which God had carved instone. However, approximately 70 years ago, a great evil arose in middle Europe and itstyranny caused war and destruction around the world. After the forces of evilhad finally been defeated and Europe had begun its great reconstruction, theleaders of the devastated middle Europe nations worried about the monumentaldeath and destruction caused by "Nationalism", decided (in a spirit of wellmeaning) to join the mid Europe countries together into one happy EuropeanCommunity of trading partners thus creating - a new omnipotent, powerful deity.This new community needed many new laws for their subjects, which were created,and thus unwittingly was released the 11th plague, the most fearsome of allplagues, Lawyers and Law-makers - for new Laws begat Lawyers, Lawyers begatLaw-makers, Law-makers begat New Laws ad infinitum. Thus, for the next 50 yearsto the present day, not one week passes without new edicts of thousands of wordsand hideous complexity being passed and becoming harsh new laws, the observanceof which require heavy taxes to oversee. The simple people do not fullyunderstand but are beginning to feel heavy burdens and that they are once morebeing driven back into slavery. No longer under the Pharaohs, their Taskmastersare now called "Commissioners". It is, perhaps, worth mentioning that the Ten Commandments given to Moses by Godneeded only 120 Hebrew words, whereas our new Overlords have given us over 1,000words on how we buy, sell, weigh, measure or describe BANANAS. The Four Horsemen of the Apocalypse The last book of the New Testament is "Revelations" and mainly deals withmysteries, myths and portents, written with such vagueness that it allows forhuge latitudes of interpretation. One small part of this Book tells of fourhorses that ride signifying the end of the world, often described in times ofold or painted by the old masters as the four horsemen of the apocalypse. I think this story is now ripe for updating, and imagine it could easily betranslated as the financial apocalypse and my biblical version would read asfollows: From the West, one bright and sunny day, a pale white horse rides fast bestrodeby a beautiful smiling siren with long flowing hair clothed in diaphanous whitesilk. She is bedecked with luxurious handbags, magnificent shoes, strings ofpearls and jewellery and carrying fully laden bags of gold. From the North comes the second Horse, of two different colours. The front halfis pale, the back is dark. Its rider has an enormous golden body and stomachshaped like an egg showing a map of the world sequined in precious stones. Thebody has two heads and two pairs of arms and legs - one head and one pair ofarms and legs face to the front, and the other set faces the back. It gallopsapace to be alongside the first Horse. From the East comes the third Horse, glowing red, ridden by a Cossack, who showsoff his consummate skill by riding low to one side or the other, or even beneaththe Horse, so that he can easily conceal himself from view. This Horse, too,rides up to gallop alongside the other two horses, and there are now three. Finally, suddenly, as though from nowhere, a fourth black Horse appears, withwide open staring eyes, ridden by a blindfolded skeleton carrying a scythe. Itjoins the others and they ride furiously, causing a great and powerful wind,which billows forth and blows round the known world, with devastatingconsequences for all mankind. These are the four Horsemen of the Financial Apocalypse - their names are Debt,Divorce, Deceit and Disaster, and the wind is called the Great Panic. Of course, only I can interpret the meaning of these writings, which would be asfollows: The first pale white horse is Debt. This seductive siren symbolises theattraction of Debt, which empowers people to acquire objects, assets,businesses, designer clothing, fast cars, bigger homes - on other people's moneyat minimal initial cost - often before they can really afford them. The speed ofthe horse signifies how fast Debt moves upward and can get out of control. The second horse is called Divorce, not the marital type of divorce, but thedivorce of risk and reward of wealth and capital from its true owners and themanagers who manage business ventures or investment on their behalf. This horse is a two coloured horse so that on whichever side you are standingyou see a different colour. It is ridden by two riders, one facing forward andone facing back. Neither can see what the other is doing. The two riders shareone golden body with a world atlas encrusted in jewels, thus symbolising thewealth of the world, shaped like an egg, indicating the creation of allenterprise. This horse is symbolic of how the rewards and risks of ownershipsand the management of capital have been completely divorced from each other.This is the current situation where those who manage huge corporations arerarely accountable to the owners - be it by virtue of unaccountableinstitutional shareholders or even many nominee shareholders forced to holdtheir fractional ownership outside of their own name because of the tax system,and therefore having little knowledge of what the management are doing. Thebanks who pay grotesquely excessive bonuses to their trading employees whopersonally risk nothing with their gambles yet take a heavy percentage of thereward for short-term success when the risks are long-term. This reward system,being an encouragement into bigger risks, also persuading clients to the biggerdeal as the clients' management are also financially rewarded for success orsize but rarely punished for failure. "Hedge Funds" take this scenario to theextreme. Thus the natural caution of risking one's own money is removed when management,(which devises its own structure of reward) and capital owners, are facingdifferent and opposite direction. The third horse is red and called Deceit. The method of riding is indicative ofdeceiving the watcher as to what its true purpose is. Our current Deceit startshigh up in government with false or misleading figures on practically anythingit presents to the public, with an uncanny skill to obscure as much as possible.Many companies' accounts can be enhanced or otherwise and the true figures noteasily noticed because of the way accounts are becoming far more complex andconstantly changing, making it easier to obfuscate. Deceit can also be just theconcealment of the massive risks that managers take by deliberate complexity.The red horse and Cossack are also symbolic for Russia, where huge fortunes havearisen very quickly and mostly obscurely but having arrived here quickly, canmove away just as quickly. Then there are the tens of thousands of people giving false information on theirmortgage or credit card applications to achieve bigger loans. And finally, thetwo million people who are fiddling the DHSS, individually, undoubtedly incomparatively paltry amounts but which in total are huge. The last horse is called "Disaster". The blindfolded skeleton symbolises deathand destruction, and the scythe symbolises that it cuts down the mighty and themeek, the young or old, rich or poor, healthy and strong or ill and weak,without discrimination. The Disaster which comes may have a natural cause, such as a huge volcaniceruption, or a massive movement of tectonic plates causing another huge tsunamior submerging San Francisco beneath the sea, or even a large meteorite landingon New York or London (or if small, hopefully Brussels or Westminster!) or apolitically inspired one of war or a massive financial mistake or even apossible deliberate currency sabotage of the dollar by China, the biggestDisaster risk is likely to be from some of the huge financial bets hidden behindhedges going badly wrong and which happen simultaneously, will produce thefourth horse. The first three horses are already out there riding; but if the fourth horseDisaster suddenly arrives the conditions for the myth to explode into realityand for the Great Wind of Panic to blow around the world at computer-like speedcreate "The Financial Apocalypse". And now to continue with some of my personal experiences..... Feeding Time for Jemima In the early 70s I bought a double corner shop and upper part in BermondseyStreet, near London Bridge Station. The property was occupied as a grocery shop/sub-post office and the upper part as a small flat and let separately. Myparticular interest was that the property was in an area zoned for office useand I felt we could redevelop for a good profit. The shop tenant was very happyto leave with a small payment. I thus arranged to visit our other tenant, whom Iassumed would be happy to leave the flat for a good premium, because she hadwritten to us on numerous occasions complaining of leaking roof, damageddraughty windows, poor decor etc etc. I went to visit the tenant with my brother Harold, as arranged, late onemorning. Having received so many complaints, we were pleasantly surprised to bewarmly greeted by a young woman of comely and casual appearance, noticeablydevoid of make-up but not unattractive. She invited us in and made cups of teafor us. After a half hour's general conversation, during which she explained sheworked for the social services department of the local council. It became clearshe was not likely to move as she felt landlords had a duty to provide flats forpeople at nominal rents and carry out huge repairs and improvements for noprofit - indeed, her political views were slightly to the left of Karl Marx,whereas at that time mine were slightly to the right of Genghis Khan. Whilst Iwas pondering this impasse, I suddenly heard a baby crying in a small cot in thecorner of the room that I had not previously noticed. Our tenant told us it was baby Jemima's feeding time, and do we mind if she fedher. Well, of course, being a man of the world I knew it only took four or fiveminutes to heat up milk in a baby bottle or a small jar of Johnson baby food, soof course I said yes and began working out my new strategy to suggest howwonderful it is for small children to live in a flat or house with a smallgarden away from the filth and grime of Central London. The tenant picked up Jemima, sat back in her armchair, suddenly pulling open herthick woolly cardigan and pulled out an enormous white breast. Both Harold's andmy eyes and Jemima's mouth were drawn like magnets to her enormous bosom. Ithink I went red with embarrassment and quickly decided that a strategicwithdrawal was called for. I thus suddenly remembered an early afternoonappointment and together with Harold swiftly left the flat. We never managed tocarry out our desired redevelopment, thus one small development for mankind wasdefeated by one woman's strategic use of her massive weaponry. A Man and a Van Some years after my Bermondsey Street failure, I was dealing with a vacantdouble lock-up shop in Rye Lane, Peckham, a busy but secondary position. Thiswas a middle pair of four lock-up shops. A local resident, who wanted to run asecond-hand goods shop, did not impress me with his idea, but it had been vacantfor some time, so I suggested that our prospective tenant should come into theoffice and convince me of his abilities to run a shop when he had not been inbusiness before. He and his partner in both meanings of the word, arrived as arranged. They couldhave been sent in by MGM Central Casting Department. He was 6' 4", tall, dark,good-looking and wearing a shiny dark suit over a T-shirt with muscles bulgingeverywhere. While pleasant of manner, there was a slight air of menace abouthim, which would have made him ideal for the slick New Orleans nightclub ownervillain in a Bond film. His "partner" was obviously up for a "Ziegfeld Follies" front line chorusdancer. She was medium height, long, beautifully coiffured blonde hair, withnear perfect figure, partially clothed in a low cut top and short skirt and verypretty, in a slightly over made up sort of way. They sat down in front of my desk, and I of course gave her the best officechair. He commenced telling me his business plan. He owned his own large van and workedfreelance for movers, especially for auctions, and had experience of houseclearances and felt he could sell much of the furniture which cost him verylittle at good prices if he had a shop. He explained his "partner" was ahairdresser who managed a shop opposite having a lot of time free, so betweenthem, they would be able to run the shop. This sounded plausible, and I wassaying so, when I noticed his pretty partner was no longer tense and began torelax and lay back in our best office chair, not realising its ability tostretch backwards. She fell back, and her legs flew into the air, and in aflash, I realised she was not one of Marks & Spencer's favourite item customers.My words seemed to get all confused, and I quite lost my thought processes andforgot about the usual references, my thoughts strayed elsewhere. I let themhave the shop. Anyway, all went well for about a year or so, despite the tenants on either sidecomplaining that he was using their forecourt as well as his own, and when askednot to, he threatened them. I said write in and I will try and deal with theproblem. They didn't. When the rent was over three months' in arrears, we phoned him and wearily heexplained that times were difficult because his hairdressing partner had givenhim the "brush-off" and gone back to her parents in Tunbridge Wells. We gave hima little more time, but matters just got worse. He had stock in the shop, so weinstructed bailiffs. They failed, and the bailiff told us they would not gothere again as he was "too tough" for them. However, eventually matters sortedthemselves out when "the Long Arm of the Law" dealt with him. Apparently he hadbeen carrying out one or two "house clearances"..... without the owner'spermission! An Optical Illusion Many years ago, when we still owned the manufacturing optical business, whichoccupied most of Panther House, and having over one hundred employees, I wasoften surprised at the diligence, keenness and enthusiasm of the staff, despitethe fact that we were obviously a loss-making and dying business. I was particularly impressed with the senior factory floor manager, who oftenworked late to check the machines. Likewise, I was pleased to see the accountsmanageress, also working late checking that all the accounts were correct andwent out on time. It was extremely gratifying to see such dedication. It was not until some time after my initial pride in our dedicated workers, whenthe account manageress left the company that I found out that although workinglate and "on the job", they weren't on the job they were being paid for. The factory manager volunteered the information that their illicit liaison(carried out in my office, as it had the only settee!) had caused both of themterrible matrimonial problems, and he apologised for the poor performance of theworks department and accounts mistakes, which he said were due to their personalproblems, which meant they both couldn't concentrate on their particular duties.It was indeed true we had been having extremely difficult production problems,and many of our accounts had been wrong, which added to the losses we weremaking, was one of the many reasons which helped us to decide to sell theoptical business, which we successfully achieved. Modern Times Once again, I can hear murmurs, saying "slightly amusing stories, but what's therelevance to our business or the bee in his bonnet about incompetent Government?" Well, despite my sadly limited experience in these matters, it seems clear tome that whenever there is some sexual involvement in decision-making, commonsense seems to fly out of the window. This, of course, brings me back toREVELATIONS. But, of course, of the most modern kind which have been revealed tous courtesy of our wonderful "Free Press", who have paid handsomely to revealthe stories to us all. We have been regaled with stories of: a former, seemingly dull, Prime MinisterBonking a frizzy haired harridan cabinet colleague; a podgy Deputy PrimeMinister Bonking a second-class civil servant (reputedly in a second-class sortof way); a blind Home Secretary, who was unable to see that the attractivesecretary he was Bonking was already married and a journalist of the oppositepolitical persuasion; a former Foreign Secretary announcing to the world that hewas Bonking his secretary before telling his wife, a former Defence SecretaryBonking (wholesale) an entire female family coven; a former Director of PublicProsecutions having to resign for Bonking those he was meant to prosecute; acurrent Director of Public Prosecutions Bonking a junior Barrister in chambers,where he may be able to give financial favours; one MP caught on Clapham commonlooking for someone to Bonk; one former married Heritage Minister sportilybonking an unknown actress, who promptly sold her story to achieve fame; one sadpolitician who accidentally committed suicide trying to Bonk himself and ofcourse there was the lying literary, Lord who served an harsh penal sentencebecause he lied about his twilight Bonking habits to some judges. That brings us to the immigrant senior immigration judge, who was BONKING afemale senior immigration judge, indeed, so vigorously, that she needed over ayear's sick leave (on full pay, of course) and he, thus not fully sated, turnedto their illegal immigrant (possible cash-in-hand) cleaner, to spice up hisBONKING, only to have her polish off his career prospects with a touch of SouthAmerican blackmail. I of course must apologise to all the others who may feel slighted that theyhave been left out of this catalogue of our administrators' peccadilloes, all ofwhom almost certainly would have been severely distracted from the jobs forwhich they are well paid, pension protected and featherbed expensed,incompetently doing on our behalf. Of course I have forgotten one very large group of people who are being well andtruly BONKED - us, the increasingly over-burdened TAXPAYER. The final question is whether the world has gone BONKERS, or is it just me? Andrew S Perloff 30 April 2007 CONSOLIDATED INCOME STATEMENTFor the year ended 31 December 2006 Year Year ended ended 31 December 2006 31 December 2005 Notes £'000 £'000 Revenue 9,722 8,498 Cost of sales (2,930) (2,035) --------- ----------Gross profit 6,792 6,463 Other income 153 133Administrative expenses (2,503) (2,061) --------- ---------- 4,442 4,535 Profit on the disposal of investment properties 438 1,607Movement in fair value of investment properties 6,081 22,537Finance costs (2,669) (3,281)Investment income 490 877Profit on disposal of available for saleinvestments (shares) 497 87Profit on sale of subsidiary - 66Surplus of assets acquired over consideration given 15 17Share of results from Associate (25) 104 --------- ----------Profit before tax 9,269 26,549 Income tax expense 2 (1,924) (5,938) --------- ----------Profit for the year 7,345 20,611 ========= ==========Attributable to:Equity holders of the parent 7,387 20,611Minority interest (42) - --------- ----------Profit for the year 7,345 20,611 ========= ==========Earnings per shareBasic and diluted 4 43.5p 121.3p ========= ========== CONSOLIDATED BALANCE SHEETAs at 31 December 2006 31 December 2006 31 December 2005 Notes £'000 £'000 ASSETS Non-current assetsProperty, plant and equipment 21 9Investment property 6 104,521 99,881Interests in Associate - 364Available for sale investments (shares) 2,051 3,047 --------- --------- 106,593 103,301 --------- ---------Current assetsInventories 269 -Stock properties 9,374 9,534Available for sale investments (shares) 423 410Trade and other receivables 3,369 3,196Cash and cash equivalents 7,736 14,546 --------- --------- 21,171 27,686 --------- --------- Total assets 127,764 130,987 ========= ========= 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 8 65,562 59,925 --------- --------- 73,269 67,632Minority interest 93 - --------- ---------Total equity 73,362 67,632 --------- --------- Non-current liabilitiesLong-term borrowings 36,989 46,562Deferred tax liabilities 12,272 11,010 --------- --------- 49,261 57,572 --------- ---------Current liabilitiesTrade and other payables 4,364 4,350Short-term borrowings 135 187Current tax payable 642 1,246 --------- --------- 5,141 5,783 --------- --------- --------- --------- Total liabilities 54,402 63,355 --------- --------- --------- ---------Total equity and liabilities 127,764 130,987 ========= ========= CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEFor the year ended 31 December 2006 Year Year ended ended 31 December 2006 31 December 2005 Notes £'000 £'000 Movement in fair value of available for sale investments (shares) taken to equity 276 (66)Deferred tax relating to movement in fair value of available for sale investments (shares) taken to (156) 20 equity --------- ----------Net income/ (expense) taken directly to equity 120 (46) Profit for the year 7,345 20,611 --------- ----------Total recognised income and expense for the year 7,465 20,565 ========= ==========Attributable to:Equity holders of the parent 7,507 20,565Minority interest (42) - --------- ---------- 7,465 20,565 ========= ========== CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 December 2006 Year Year ended ended 31 December 2006 31 December 2005 Notes £'000 £'000Cash flows from operating activitiesProfit before interest, investment income and tax 4,442 4,535Add: Depreciation charges for the year 9 9Add: (Less)/ add: provisions against available for sale investments (shares) - current assets (12) 13 ---------- ---------Profit before working capital change 4,439 4,557Decrease in stock properties 90 221Decrease in receivables 25 1,067(Decrease)/ Increase in payables (203) 328 ---------- ---------Cash generated from operations 4,351 6,173 Interest paid (2,730) (3,105)Income tax paid (1,424) (1,896) ---------- ---------Net cash from operating activities 197 1,172 Cash from investing activitiesPurchase of plant and equipment (10) (9)Purchase of investment properties (1,648) (632)Purchase of available for sale investments (shares)- current assets (1) (100)- non current assets (200) (7)Investment in subsidiaries - (76)Net cash acquired with subsidiary 361 -Proceeds from disposal of subsidiary - 66Proceeds from sale of investment properties 3,527 12,707Proceeds from the disposal of available for sale investments (shares) - non current assets 1,969 399Dividend income received 45 37Interest income received 445 840 ---------- ---------Net cash from investing activities 4,488 13,225 Financing activitiesNew loans net of repayments (9,625) (12,384)Dividends paid 3 (1,870) (2,804) ---------- ---------Net cash used in financing activities (11,495) (15,188) Net (decrease) in cash and cash equivalents (6,810) (791) Cash and cash equivalents at the beginning of period 14,546 15,337 ---------- ---------Cash and cash equivalents at the end of period 7,736 14,546 ========== ========= NOTES TO THE PRELIMINARY ANNOUNCEMENTFor the year ended 31 December 2006 1. General Information While the financial information included in this preliminary announcement hasbeen prepared in accordance with International Financial Reporting Standards(IFRSs), this announcement does not itself contain sufficient information tocomply with IFRSs. The Company expects to publish full financial statements thatcomply with IFRSs in May 2007. The financial information set out in the announcement does not constitute thecompany's statutory accounts for the years ended 31 December 2006 or 2005. Thefinancial information for the year ended 31 December 2005 is derived from thestatutory accounts for that year, which were prepared under IFRSs, which havebeen delivered to the Registrar of Companies. The auditors' opinion on thoseaccounts 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 2006 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. There is no material seasonality associated with the Group's activities. 2. Taxation The charge for taxation comprises the following: 31 December 2006 31 December 2005 £'000 £'000 Current year UK corporation tax 1,108 2,242Prior year UK corporation tax (290) (180)Current year deferred tax 1,106 3,876 ------------ -----------Income tax expense for the year 1,924 5,938 ============ =========== Corporation tax is calculated at 30% (2005 - 30%) of the estimated assessableprofit for the year. 3. Dividends Amounts recognised as distributions to equity holders in the period: 31 December 2006 31 December 2005 £'000 £'000 Final dividend for the year ended 31 December 2005 of 5p (2004 - 4p) per share 850 680Special interim dividend for the year ended 31 December 2005 of 10p per share* - 1,274Interim dividend for the year ended 31 December 2006 of 6p (2005 - 5p) per share 1,020 850 ------------ ----------- 1,870 2,804 ============ =========== * A S Perloff waived his personal entitlement to the special 10p dividend. The Directors recommend payment of a final dividend of 6p per share (2005 - 5p).The final dividend will be payable on 28 June 2007 to shareholders on theregister at the close of business on 25 May 2007. 4. Earnings per ordinary share (basic and diluted) The calculation of earnings per ordinary share is based on earnings, afterminority interests, of £7,345,000 (2005 - £20,611,000) and on 16,998,151ordinary shares being the weighted average number of ordinary shares in issueduring the year (2005 - 16,998,151). 5. Net assets per share 31 December 2006 31 December 2005 £'000 £'000 Total equity attributable to shareholders per 25p ordinary share 431p 398p ============ =========== The calculation of net asset per ordinary share is based on the equityattributable to share holders of the equity in the parent company, and on16,998,151 (31 December 2006 and 31 December 2005) ordinary shares being theweighted average number of ordinary shares in issue throughout the twelve monthsended 31 December 2006. 6. Investment Property Investment Properties £'000Fair value of investment property At 1 January 2006 99,881Additions 1,648Disposals (3,089)Revaluation increase 6,081 ------------At 31 December 2006 104,521 ============ 7. Annual General Meeting The Annual General Meeting will be held on 27 June 2007. 8. Retained earnings 31 December 31 December 2006 2005 £'000 £'000 At 1 January 59,925 42,164Profit for the period 7,387 20,611Movement in fair value of available for sale investments (shares) taken to equity 276 (66)Deferred tax relating to movement in fair value of available for sale investments (shares) taken to equity (156) 20Dividends paid (1,870) (2,804) ----------- ----------- 65,562 59,925 ----------- ----------- 9. 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. 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