Panther Securities : Year-end Announcement 31 December 2020 – 26 May 2021

26 May 2021

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

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

Final results for the year ended 31 December 2020

CHAIRMAN'S STATEMENT

I am pleased that I am able to present the results for the year ended 31 December 2020, which, by anybody's view, has been a most unusual year.

Most of our tenants have had a torrid time due to the Covid-19 pandemic and the numerous changing government actions, rules, and regulations brought in to protect its citizens often in ways not easily understood by the majority, and often the minutiae of the rules not seemingly logical.

The restricted number of businesses deemed essential that were allowed to open their doors for trade may have done much better than normal, and many of those that had to close, even temporarily, have had financial problems.

The government stepped up to the mark with numerous financial reliefs, loans, and even paying furloughed employees wages to an average wage limit so that the country's private sector did not go bankrupt, but of course, they could not and did not deal with all eventualities. In particular, this caused the majority of landlords to be left to fend for themselves to deal with many tenants who either did not receive any help or more likely insufficient help to overcome the financial effects of forced closure. Thus our results, to my mind, have shown a remarkable resilience when you consider the year's problems.

The profit for the year ended 31 December 2020 was £2,573,000 before tax, compared to a loss before tax of £4,963,000 for the previous year.

Our rental receivable amounted to £13,051,000 compared to the previous year's £14,226,000 and as so often is the case, the profit or loss figure is accentuated by the non-cash valuation movements.

The independent revaluation of our charged portfolio, the majority of which was carried out by Messrs Carter Jonas, showed an improved value of £6,146,000 largely bolstered by the increased value of our industrial investments and properties with residential development value, whereas some retail properties have fallen in value.

The swap liability has risen by £5,498,000 due to future expected interest rates having fallen further as at the year-end. Our profit figures have also taken into account an increase of circa £1,100,000 to the bad debt provision, which was considered prudent by the Board whilst the pandemic and restrictions are still running, and its financial effects not fully known.

During the year, we gave about 67 different tenants concessions, totalling about £315,000 in rent waivers. Additionally, we gave a number of concessions by way of deferred payment arrangements and also allowed some tenants to utilise part of their deposits that we hold towards current rent due.

All concessions were independently negotiated to suit the particular individual circumstances of our large variety of tenants.

It is of course irritating that our own freehold landlords, being mainly Councils who receive about £675,000 per annum in ground rent and separately but in addition business rates from us, even on vacant properties, have failed to give us the slightest concession, even when government issued a formal code of conduct saying they should!

To harass landlords' further the government has made it illegal for landlords to take legal action to collect rents.

If a shop trader is forced to close because of an emergency government edict, even when they are relieved of business rates under a Covid-19 concession and circumstances are still so bad that the trader vacates the premises the business rates fall back onto the landlord who then has to pay full business rates. Is this not an obvious abuse of the rules of fairness in taxation?

Disposals

55 West Street Southport

We sold a small freehold warehouse in West Street, Southport, formerly used by Beales Southport store, for £250,000 which showed a small profit.

5 Hall Road Maldon

This small freehold factory was sold to the tenant for £350,000 showing a profit on book value.

43/45 Main Street Coatbridge

This property was destroyed by a fire in 2015, and shortly thereafter we received insurance claim proceeds to its then full value, which has been accounted for in previous accounts. However, the remaining freehold of the cleared site was sold to the local council for £112,500 well in excess of its book value.

Acquisitions

Bedford

In April 2020 we purchased under a previous long-term agreement, the freehold of 26-36 & 3- 5 Harpur Street, Bedford, a former Beales store, situated in the best position in Bedford. The cost was £3,475,000 including the excessive stamp duty payable. We consider the rental value is about £250,000 p.a. for the ground floor alone and have planning consultants working on the planning applications needed to convert the upper parts for up to thirty two flats.

Wickford

We were able to buy back a block of four dilapidated long leasehold factory units in Wickford, totalling 20,000 sq.ft. for a total cost of £320,000. We already owned the freeholds being part of our Wickford Industrial estate, which totals 25 units. These four units were part of a separate

1.5 acre freehold site on which we had previously obtained planning permission for residential development, but this planning permission required the acquisition of two adjoining freehold units owned by different owners, which is now regarded as unlikely.

We now have the ability to rebuild modern warehouse/industrial units totalling about 30,000 sq.ft. on this site for which there is strong demand. This is expected to be a profitable scheme as industrial rentals have risen considerably since our original residential proposals.

Developments

Broadstairs

During this account period we show £1,746,000 development costs in Broadstairs, the ground floor of which has been pre-let as a Tesco Express store for £55,000 p.a. We intend to hold the property as a long-term investment, thus the twelve newly built flats above, some of which have sea views will be let after completion. Progress on this site progressed surprisingly well. In my last interim statement, I expected completion of the developments at the end of January 2021. This has been delayed by the Council's sensible requirement that all three utilities should be dealt with at the same time so as to disturb the recently renewed road surface as little as

possible, and also demanding a large payment for resurfacing after the works completion. Of course, the Council had known about the development for approaching 18 months and could have delayed their works until near completion. However, completion should happen soon. When fully let and occupied, this entire property should produce an additional £160,000 p.a. rents receivable for the Group.

Swindon

We are pleased that at long last our subsidiary company, CJV Properties Ltd has received two separate planning permissions one for a leisure/restaurant two storey development and the other ground floor retail/leisure units and 8 floors above in a tower block with 68 residential units, which is subject to agreeing any Section 106 payments that may be required. This property is held on a medium term leasehold from the local authority at a ground rent, but to facilitate this development the Council have agreed terms for a new 250 year lease at a percentage of the rental income from the commercial part of the scheme. Solicitors are already instructed and dealing with this lease extension.

Tenant Activity

There has been a considerable amount of activity with our tenants with 18 residential tenants vacating against 24 new lettings. The commercial tenancies provided 57 tenants vacating with 52 new lettings or tenancy renewals.

The effect of this considerable activity was that there will be about £210,000 income loss on an annualised basis. Now that retail lockdown has ended, we are hopeful there will be a surge in trade that encourages an army of entrepreneurs to take premises for new enterprises. This does not include the cost of Covid-19 concessions or loss of income from Beale's in which the liquidator offered leases for surrender but they have not yet been accepted to save holding costs.

Beales Stores

Many people, including surveyors, valuers, banks and accountants have been fearful of the problems of vacant properties and have given cautious and low valuations on these type of properties. However, we see this differently as at their reduced values, with proper care and attention, they have potentially much bigger scope for appreciation as and when they are brought back into full use, probably after different trades are implemented and occupied on rental or otherwise. Thus the early results on this minor group of our property portfolio is already beginning to show promise.

Included in these figures is a new letting of the Beale's former Lumley Road, Skegness store to a rent that rises to £150,000 at the fifth year.

Subsequent to our year-end, a section of the former Beale's store at Keighley has been let to the Department of Work and Pensions as a Job Centre at £55,000 per annum. We still have the major part of the vacant space available for letting within this Keighley store, which is part of the town's main shopping centre.

We expect to make further headway in replacing the £890,000 p.a. rent lost from our former tenant, Beale's. I have previously mentioned the car parks attached to Beale's and these should in due course, produce a good income but the various lockdowns prevented them producing their full potential. There are, of course, a number of negotiations continuing for many of the other former department stores.

Post Balance Sheet Events

In January 2021, we exchanged contracts to purchase a substantial freehold factory and warehouse of approximately 96,000 sq.ft. of usable space situated in approximately six acres of industrial land. The contract price agreed is £3,300,000 with a delayed completion of between 15 and 30 months until the completion of the vendors' new building. Should it be necessary for a further delay, the vendors will pay a rent of £340,000 per annum until they vacate.

This purchase will tilt our portfolio towards more industrial investment.

Staff

The Covid-19 pandemic presented difficulties with running our office and its usual smooth management operations, and we thus implemented the furlough scheme for a number of our staff.

At the beginning of 2019, we took on a new software management system specially designed for property companies. In using this system more intensely we found that we could manage with three fewer staff. We wish them every success for their future careers. Additionally, Hyam Harris who had been with us for 32 years has moved to part-time and, additionally, Ram Patel has retired after twenty-nine loyal years. I would like to thank them all for their diligence and excellent company spirit throughout their time with us.

It is intended that Simon Peters, who has been Finance Director for over fifteen years, and played a major part in keeping the Group on a steady course, will step up to be Chief Executive Officer as from 1 January 2022 thus relieving me of some of my responsibilities, despite