TIDMSAF
RNS Number : 0364W
Safeland PLC
14 August 2015
14 August 2015
Safeland plc
("Safeland" or the "Company")
Audited final results for the year ended 31 March 2015
Managing Director's Statement
Key achievements
The year to 31 March 2015 saw a number of key achievements,
although post-year end brought considerable sadness as our Chairman
Ray Lipman passed away on 9 June. I would like to pay tribute to
Ray - my father - who co-founded the group and led it with
distinction for many years.
As announced by Ray in his Chairman's Statement last year, we
were able to make our first distribution to shareholders for more
than a decade (a dividend in specie equivalent to 10.73p per share)
in the year to 31 March 2015, from the proceeds of the demerger of
Safestay plc in May 2014 following a capital restructuring.
Subsequent strong trading in the year to 31 March 2015 has enabled
the directors to recommend a final dividend of 1.75p per share,
subject to shareholders' approval at the Company's AGM on 17
September 2015, payable on 25 September 2015 to holders of shares
registered at close of business on 28 August 2015.
On 6 November 2014, we announced that we had exchanged contracts
on the sale of 31 residential units in Wimbledon for a total of
GBP10.23 million. Construction of these flats started earlier this
year. In July 2015, the first block of 17 flats was completed and
sold; the remaining flats are anticipated to complete and be sold
later this month.
In addition, in November 2014, we announced completion of the
sale of the Chandos Tennis Club to a prominent housebuilder who
plans to develop the site. We have already received initial
consideration of GBP4.0 million in cash and we will receive four
detached houses in the development, which the directors expect to
be completed and transferred to the Company by summer 2017. The
directors have estimated the value of these four houses in
aggregate to be GBP9.2 million when they are completed.
The GBP4.0 million initial consideration received from the sale
of the Chandos Tennis Club was used to repay bank borrowings which
had been secured on the site. There may be additional overage
consideration payable to Safeland from the onward sale of
residential units on the site if certain sales value per square
foot thresholds are achieved.
Financial review
Group revenue for the year to 31 March 2015 of GBP10.2 million
comprises sales of development properties, rental income,
management fees, and hotel revenue from the north London hotel
purchased in the preceding year, and was broadly in line with the
GBP10.4 million in the year to 31 March 2014. However, we increased
our gross profit from GBP2.1 million to GBP2.7 million and, most
notably with the profit from the disposal of the Chandos Tennis
Club, our operating profit climbed considerably, from GBP1.3
million in the year to 31 March 2014 to GBP6.9 million in the year
to 31 March 2015.
The value of our trading stock has increased during the year by
more than GBP2 million, from GBP12.5 million at 31 March 2014 to
GBP14.7 million at 31 March 2015. However, mainly as a result of
the tennis club disposal and a consequent reduction in bank
borrowings, the statement of financial position shows gearing as at
31 March 2015 of 54%, reduced from 69% as at 31 March 2014.
Net assets - our total balance sheet value or NAV - rose from
GBP10.6 million at 31 March 2014 (equivalent to 63p per share) to
GBP14.7 million (equivalent to 87p per share) at 31 March 2015, a
38% increase year-on-year.
Total shareholder returns increased considerably, to 150.2% in
the year ended 31 March 2015, from 86.7% in the year ended 31 March
2014.
Outlook
We remain confident that our recent and planned property
developments combine to make the outlook positive for shareholders.
The property market in and around London remains buoyant.
Therefore, while we are mindful of potential increases in interest
rates and the possible impact on London real estate of stock
exchange uncertainty and the financial crisis in Greece, we view
the year ahead with confidence.
Larry Lipman
Managing Director
13 August 2015
Strategic Report
The directors present their strategic report on the affairs of
the Company and the Group together with the financial statements
for the year ended 31 March 2015.
Principal activities
The principal activities of the Group comprise property trading,
property refurbishment (including redevelopment), property
investment and property fund management. In the previous year, the
group acquired a hotel which continues to operate while planning
for alternative use is sought.
Review of business and future prospects
The Group's key achievements and financial review are detailed
in the Managing Director's Statement.
A dividend equivalent to 10.73p per share was paid by the
Company during the year to 31 March 2015, representing payment in
full of the funds generated by our 20% share in Safestay plc (2014:
GBPnil). The directors recommend the payment of a final dividend of
1.75p per share subject to shareholders' approval at the Company's
AGM on 17 September 2015, payable on 25 September 2015 to holders
of shares registered at close of business on 28 August 2015.
Key performance indicators
The Group's key performance indicators are net asset value per
share and total shareholder return and are detailed in the
financial review section of the Managing Director's Statement.
The directors were pleased to see the increase in the share
price from 24.27p to 50.00p during the year to 31 March 2015 which,
together with a dividend which comprised a distribution in specie
from our holding in Safestay plc, gave a shareholder return of
150.2%, up from 86.7% in the year to 31 March 2014.
Net asset value per share is calculated by dividing net assets
per the consolidated statement of financial position by the number
of shares in issue at that date. Total shareholder return measures
the return to shareholders from share price movements supplemented
by other returns such as dividends.
Principal risks and uncertainties
The principal risks and uncertainties that could potentially
have an impact on the Group's performance are detailed below.
Business risk
Safeland operates in the property market, which over the years
has always been liable to price fluctuations, dependent upon the
state of the UK economy. In the event that there was a drop in the
value of property throughout the country, this would obviously
affect the properties held by Safeland at that time, but would also
present an opportunity for buying at distinctly lower levels than
exist at present. The Group mitigates the risk of downturns in
property values by ensuring diversity within its property
portfolio.
An assessment of the eventual value of four houses in a
development to be constructed has been made by the directors using
their knowledge of the current property market in the relevant
geographic area and their assessment of that market over the period
to completion of the development. That value has been discounted to
a present-day value using a discount rate which comprises the
weighted average cost of capital.
It is conceivable that governments may wish to harmonise the
rate of stamp duty throughout Europe, which may cause an increase
in the UK rates that exist at present which would erode the margins
that Safeland is able to attain on its trades.
Over the years, Safeland has added value by obtaining change of
permitted use of properties. Adverse changes to the planning
requirements could affect this methodology.
Financial risk
In order to finance the purchase of properties that Safeland
trades in, it uses bank loans with variable interest rates that
track LIBOR. Increases in the LIBOR rate will adversely affect the
profit that Safeland is able to make. This has been partially
mitigated by the use of interest rate swaps and caps.
The determining factor as to how much Safeland is able to buy at
any one time is limited by cash and there may be times when
opportunities are not able to be taken advantage of as all
available monies have been allocated elsewhere. Strict financial
controls are in operation to ensure that monies cannot be expended
above the available limits.
Financial risk management policies are described in the notes to
the financial statements.
Larry Lipman
Managing Director
13 August 2015
Consolidated Income Statement
Year ended 31 March 2015
Note 2015 2014
GBP'000 GBP'000
Revenue 10,256 10,408
Cost of sales (7,495) (8,269)
-------- --------
Gross profit 2,761 2,139
Administrative expenses (1,570) (1,458)
Gain on revaluation of investment
properties 225 325
Profit on disposal of investment
property 5,272 -
Profit on disposal of investment
in jointly-controlled entity 209 -
Share of profit of jointly controlled
entity 11 252
Dividend from investment 11 -
Share of results of associate 29 53
-------- --------
Operating profit 6,948 1,311
Finance income 167 1
Finance costs (403) (409)
-------- --------
Profit before tax 6,712 903
Tax (979) (93)
-------- --------
Profit for the financial year
attributable to owners of the
parent company 5,733 810
======== ========
Basic earnings per share 2 34.02p 4.81p
Diluted earnings per share 2 15.62p 3.17p
The revenue and operating result for the year is derived from
continuing operations in the United Kingdom.
Consolidated Statement of Comprehensive Income
Year ended 31 March 2015
2015 2014
GBP'000 GBP'000
Profit for the year 5,733 810
-------- --------
Other comprehensive income
Fair value gains on available-for-sale
financial assets 82 -
Other comprehensive income
for the year, net of tax 82 -
-------- --------
Total comprehensive income
for the year attributable
to owners of the parent company 5,815 810
======== ========
Consolidated Statement of Financial Position
31 March 2015
Note 2015 2014
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 1,981 151
Investment properties 3 723 5,343
Investment in jointly controlled
entity - 698
Investment in associate 123 126
Available-for-sale investments 307 50
Trade and other receivables 7,985 -
-------- --------
Total non-current assets 11,119 6,368
-------- --------
Current assets
Trading properties 4 14,718 12,483
Trade and other receivables 364 1,509
Cash and cash equivalents 454 1,003
-------- --------
Total current assets 15,536 14,995
-------- --------
Total assets 26,655 21,363
-------- --------
Current liabilities
Bank loans and overdrafts 1,258 -
Trade and other payables 1,762 1,501
Derivative financial instruments - 3
Corporation tax payable 1,696 132
-------- --------
Total current liabilities 4,716 1,636
-------- --------
Non-current liabilities
Bank loans 7,185 8,400
Deferred income tax liabilities - 717
-------- --------
Total non-current liabilities 7,185 9,117
-------- --------
Total liabilities 11,901 10,753
-------- --------
Net assets 14,754 10,610
======== ========
Equity
Share capital 843 843
Share-based payment reserve 486 348
Investment revaluation reserve 87 5
Retained earnings 13,338 9,414
-------- --------
Total equity attributable to
owners of the parent company 14,754 10,610
======== ========
These financial statements were approved by the Board of
Directors and authorised for issue on 13 August 2015.
Consolidated Statement of Changes in Equity
Year ended 31 March 2015
Share Share Capital Share- Investment Retained Total
Capital premium redemption based revaluation earnings equity
GBP'000 account reserve payment reserve GBP'000 GBP'000
GBP'000 GBP'000 reserve GBP'000
GBP'000
-------- -------- ----------- -------- ------------ --------- --------
Balance
at 1 April
2014 843 - - 348 5 9,414 10,610
Comprehensive
income
Profit for
the year - - - - - 5,733 5,733
Revaluation
of available-for-sale
investments - - - - 82 - 82
Total comprehensive
income - - - - 82 5,733 5,815
-------- -------- ----------- -------- ------------ --------- --------
Share-based
payment
charge for
the year - - - 138 - - 138
Dividends (1,809) (1,809)
-------- -------- ----------- -------- ------------ --------- --------
Total transactions
with owners
recognised
directly
in equity - - - 138 - (1,809) (1,671)
-------- -------- ----------- -------- ------------ --------- --------
Balance
at 31 March
2015 843 - - 486 87 13,338 14,754
======== ======== =========== ======== ============ ========= ========
Share Share Capital Share- Investment Retained Total
Capital premium redemption based revaluation earnings equity
GBP'000 account reserve payment reserve GBP'000 GBP'000
GBP'000 GBP'000 reserve GBP'000
GBP'000
-------- -------- ----------- -------- ---------------- --------- ------------------
Balance
at 1 April
2013 843 5,351 847 211 5 2,406 9,663
Comprehensive
income
Profit for
the year - - - - - 810 810
Total comprehensive
income - - - - - 810 810
-------- -------- ----------- -------- ---------------- --------- ------------------
Capital
reduction - (5,351) (847) - - 6,198 -
Share-based
payment
charge for
the year - - - 137 - - 137
-------- -------- ----------- -------- ---------------- --------- ------------------
Total transactions
with owners
recognised
directly
in equity - (5,351) (847) 137 - 6,198 137
-------- -------- ----------- -------- ---------------- --------- ------------------
Balance
at 31 March
2014 843 - - 348 5 9,414 10,610
======== ======== =========== ======== ================ ========= ==================
Consolidated Statement of Cash Flows
Year ended 31 March 2015 Note 2015 2014
GBP'000 GBP'000
Operating activities
Cash (outflow) from operations 5 (2,376) (787)
Interest paid (403) (416)
Corporation tax paid (132) -
-------- --------
Net cash (outflow) from operating
activities (2,911) (1,203)
-------- --------
Investing activities
Interest received 1 1
Purchase of property, plant and
equipment (2,003) (115)
Purchase of available-for-sale investment (175) -
Distributions from associate 32 30
Proceeds from sale of investment
properties 4,230 -
Proceeds from sale of property,
plant and equipment 119 56
-------- --------
Net cash generated/(outflow) from
investing activities 2,204 (28)
-------- --------
Financing activities
New loans 9,258 8,206
Loan repayments (9,100) (6,684)
Net cash generated from financing
activities 158 1,522
-------- --------
Net (decrease)/increase in cash
and cash equivalents (549) 291
Cash and cash equivalents at beginning
of year 1,003 712
Cash and cash equivalents at end
of year 454 1,003
======== ========
Notes to the accounts
31 March 2015
1 BASIS OF PREPARATION
On 13 August 2015, the Directors approved this final results
announcement for publication. Copies of this announcement are
available from the Company's registered office at 1a Kingsley Way,
London N2 0FW and on its website www.safeland.co.uk. The Annual
Report and Accounts will be sent to shareholders in due course and
will also be available on the Company's website www.safeland.co.uk.
The financial information presented above does not constitute
statutory financial statements as defined by section 435 of the
Companies Act 2006 for the year ended 31 March 2015 or the year
ended 31 March 2014.
The financial information for the year ended 31 March 2015 is
derived from the statutory financial statements for that year,
prepared under IFRS, upon which the auditors have reported. The
audit report was unqualified, did not include references to matters
to which the auditor drew attention by way of emphasis without
qualifying their report and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006. The statutory
financial statements for the year ended 31 March 2015 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting.
The financial information for the year ended 31 March 2014 is
derived from the statutory financial statements for that year,
prepared under IFRS, upon which the auditors have reported. The
audit report was unqualified, did not include references to matters
to which the auditor drew attention by way of emphasis without
qualifying their report and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The accounting policies applied in this announcement are
consistent with those of the annual financial statements for the
year ended 31 March 2014, as described in those annual financial
statements.
2. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2015 2014
GBP'000 GBP'000
Profit for the year attributable
to equity holders of the company 5,733 810
======== ========
2015 2014
'000 '000
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 16,851 16,851
Effect of dilutive potential ordinary
shares 19,865 8,693
------- -------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 36,716 25,544
======= =======
Net asset value at 31 March 2015 was GBP14,754,000 (2014:
GBP10,610,000), equivalent to 87p per ordinary share (2014: 63p).
The net asset value is taken from the Consolidated Statement of
Financial Position.
3. investment properties
2015 2014
GBP'000 GBP'000
Fair value
At 1 April 2014 5,343 5,018
Disposal of properties in the year (4,845) -
Increase in fair value during the
year 225 325
-------- --------
At 31 March 2015 723 5,343
======== ========
The fair value of the investment properties at 31 March 2015
comprises freehold properties of GBP265,000 (2014: GBP4,765,000)
and long leasehold properties of GBP458,000 (2014: GBP578,000). The
leasehold and freehold investment property have been classified
within level 3 of the fair value hierarchy (unobservable
inputs).
During the year to 31 March 2015, the sale of the Chandos tennis
club to a prominent housebuilder was completed. The consideration
payable comprises GBP4,000,000 in cash, which has been received,
and the balance will be satisfied by way of the transfer to
Safeland of four detached houses (valued by Safeland's directors at
GBP9,200,000 in aggregate, discounted back to GBP7,800,000 for the
purposes of these accounts) in the completed development.
The Chandos tennis club sale is an arms-length market-based
transaction that includes deferred consideration. The deferred
element of the consideration will not be revalued (other than
unwinding the discount applied to it) and comprises four detached
houses (valued by the Group's directors as level 2 inputs under
IFRS 13, at GBP9,200,000 in aggregate) in the completed development
anticipated by summer 2017. The Group is not responsible for the
construction work required to complete these houses.
The deferred element of the consideration will not be revalued
until formal completion of the construction works in respect of
these properties. Unwinding the discount applied to it will be
included in finance costs in the Statement of Comprehensive Income
and also added to the value of the relevant properties.
The initial value of houses under construction has been
determined using a directors' estimate based on their detailed
knowledge of the relevant property market. This is a Level 2
valuation within the IFRS 13 hierarchy.
The discount rate applied to the deferred consideration was 6.5%
comprising:
%
Borrowing rate applicable to the
Group 4.00
Risk premium 2.50
-------------
6.50
-------------
The Group's borrowing rate and the rate applied to the risk
premium have been determined by the Directors' based upon their
knowledge of the Group's financial position and their knowledge of
the housing market in London.
The proceeds and profit on sale were as follows:
GBP'000
Cash (tennis club plus two unrelated
properties) 4,230
Properties to be constructed (Chandos
Tennis Club only) 9,200
----------------
Total proceeds 13,430
Discount applied to the value of
properties to be constructed (1,381)
----------------
Proceeds of sale recognised 12,049
Cost of properties and selling costs (6,777)
----------------
Profit on sale of investment properties 5,272
----------------
The leasehold and freehold investment property have been
classified within level 3 of the fair value hierarchy (unobservable
inputs).
The investment properties consist of residential property
located in North London and have been valued by the Directors. The
methodology to value these properties is to compare historical
comparable market transactions less a percentage reduction to
reflect the limitations of restrictive tenancies. Based on
valuations at 31 March 2015, if the percentage reduction was 5%
higher or lower and all other variables were held constant, the
Group's net profit would increase or decrease immaterially (2014:
GBP65,000).
The valuation of the Chandos tennis club of GBP4,500,000 at 31
March 2014
The comparative valuation shown in the table below represents
the Chandos Tennis Club, which was sold in the year to 31 March
2015.
31 March 2014 valuation
GBP'000 GBP'000 GBP'000
GBP4,500,000 Change in discount
rate
-0.5% 0% 0.5%
Change
in -5% 5,138 5,038 4,939
risk
rate 0% 4,564 4,500 4,378
5% 3,990 3,902 3,816
======== ======== ========
The directors do not consider the fair value of the Group's
lease obligations associated with its long leasehold investment
properties to be material to the financial statements. As a result,
no finance lease obligations are included in the statement of
financial position at 31 March 2014 or 31 March 2015.
The Group has pledged investment properties with a carrying
value of GBP703,000 (2014: GBP5,323,000) to secure banking
facilities granted to the Group.
The fair value of the Group's investment properties at 31 March
2015 had been arrived at on the basis of market value as defined in
the Apportionment and Valuation Manual of the Royal Institution of
Chartered Surveyors. The valuations were performed by
directors.
Property rental income earned by the Group from its investment
properties amounted to GBP146,000 (2014: GBP37,000). Direct
operating expenses arose on these properties during the year of
GBP1,000 (2014: GBP1,000).
The historical cost of investment properties included in the
financial statements at 31 March 2015 is GBP833,000 (2014:
GBP1,169,000) of which GBP295,000 (2014: GBP464,000) are freehold
and GBP545,000 (2014: GBP705,000) are long leasehold
properties.
4. TRADING PROPERTIES
2015 2014
GBP'000 GBP'000
Properties for resale 14,718 12,483
======== ========
The Group has pledged properties for resale with carrying value
of GBP12,747,000 (2014: GBP11,103,000) to secure banking facilities
granted to the Group.
Properties for resale were reviewed for impairment as at 31
March 2015, the Directors are satisfied that no impairment is
necessary.
Trading properties are properties acquired or developed and held
for sale and are shown at the lower of cost or net realisable
value. The cost of trading properties are those costs directly
associated with the acquisition and development of a specific site.
Net realisable value is the estimated selling price in the ordinary
course of business less estimated costs to completion and the
estimated costs necessary to make the sale.
5. NOTES TO THE CASH FLOW STATEMENT
2015 2014
GBP'000 GBP'000
Profit before tax 6,712 903
Adjustments for:
Depreciation of property, plant and
equipment 62 50
Profit on sale of investment in joint
venture (209) -
Gain on sale of property, plant and
equipment (9) (9)
Gain on sale of investment properties (5,272) -
Revaluation of investment properties (225) (325)
Finance cost 403 409
Finance income (1) (1)
Unwinding of discount on deferred
revenue (166) -
Share-based payment charge 138 137
Share of results of jointly-controlled
entity (11) (252)
Share of results of associate (30) (53)
Changes in working capital:
(Increase) in trading properties (2,235) (2,619)
(Increase)/decrease in trade and other
receivables (1,706) 197
Increase in trade and other payables 173 776
Cash (outflow) from operations (2,376) (787)
======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFFFMDFISEFA
Safeland (LSE:SAF)
Historical Stock Chart
From Dec 2024 to Jan 2025
Safeland (LSE:SAF)
Historical Stock Chart
From Jan 2024 to Jan 2025
