TIDMSAF
RNS Number : 7244H
Safeland PLC
22 August 2016
22 August 2016
Safeland PLC
("Safeland", "the Company" or "the Group")
Audited Final Results
For the Year to 31 March 2016
Managing Director's Statement
Key achievements
I am pleased to report a successful year to 31 March 2016, with
a significant increase in turnover and profit. The year brought
considerable sadness too, however, as our Chairman Ray Lipman
passed away in June 2015. Ray - my father - co-founded the Group
and led it for many years.
In the prior year, we were able to make a first distribution to
shareholders for more than a decade, and we were pleased to
continue this new trend with an interim dividend of 1.5p for the
half-year to 30 September 2015. No final dividend is proposed.
In November 2014 we exchanged on the sale of 31 residential
units in Wimbledon for a total of GBP10.23m, of which the first
block of 17 flats was completed and sold in July 2015; the
remaining flats were completed and sold in the year to 31 March
2016 and are reflected in these results.
Just before Christmas 2015, the Group agreed the purchase of a
substantial detached freehold house in London, N2, for GBP6.225
million in cash, funded from existing bank facilities and its own
cash reserves, with the acquisition being completed on 31 March
2016. The property is being refurbished.
Since the balance sheet date, a detached house in Golders Green,
London NW11, which was bought by the Group in 2014, has been split
into two semi-detached houses, both of which were sold.
Planning permission has recently been received for the
conversion into 18 apartments of a hotel in Muswell Hill, London
N10, owned by the Group. The hotel recently ceased trading and is
now under refurbishment.
During the year, we participated in a placing of shares by
Safestay plc, acquiring 1,070,864 new shares in Safestay at a cost
of GBP663,935, bringing our total holding to 1,420,864 shares,
being 4.3% of the issued share capital of Safestay.
There were two purchases of own shares for cancellation during
the year: 1,160,800 shares at 57p per share on 1 October 2015, and
130,000 shares at 60p per share on 17 November 2015. The directors
considered that the acquisition and cancellation of these shares
would enhance the value of the remaining shares in issue.
Financial review
Group revenue for the year to 31 March 2016 of GBP21.1 million
comprises sales of development properties, rental income,
management fees, and hotel revenue from the north London hotel (now
closed), and was significantly in excess of the GBP10.3 million in
the year to 31 March 2015. We increased gross profit from GBP2.8
million to GBP7.1 million though operating profit fell from GBP6.9
million in the year to 31 March 2015 to GBP5.9 million in the year
to 31 March 2016.
The value of our trading stock has increased from GBP12.7
million at 31 March 2015 (as restated) to GBP14.8 million at 31
March 2016. The statement of financial position shows gearing at 31
March 2016 of 45%, reduced from 54% at 31 March 2015.
Net assets - our total balance sheet value or NAV - rose from
GBP14.8 million at 31 March 2015 (equivalent to 87p per share) to
GBP17.7 million equivalent to 114p per share at 31 March 2016 - a
29% year-on-year increase, albeit with fewer shares in issue
following the buyback and cancellation of shares in the year.
Total shareholder returns decreased from 150.2% in the year
ended 31 March 2015 to 16.0% in the year to 31 March 2016, as the
year to 31 March 2015 included the benefit of the sale of Chandos
Tennis Club and the dividend in specie from Safestay.
Outlook
We have entered an extremely volatile environment, therefore
shareholders should be aware that as an opportunistic trading and
investment company, turnover and profit flow can fluctuate
significantly.
We shall continue to monitor the market closely and, as always,
seek to take advantage of any opportunities as they arise.
Larry Lipman
Managing Director
22 August 2016
Strategic Report
Principal activities
The principal activities of the Group comprise property trading,
property refurbishment (including redevelopment), property
investment and property fund management.
Review of business and future prospects
The Group's key achievements and financial review are detailed
in the Managing Director's statement. The results for the year are
set out in detail below.
An interim dividend of 1.5p per share (totalling GBP233,400) was
paid by the Company during the year to 31 March 2016. No final
dividend is proposed.
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 50p to 56.5p in the year to 31 March 2016 which,
together with dividends, gave a shareholder return of 16.0%, down
from 150.2% in the year to 31 March 2015 for the reasons stated in
the managing director's statement.
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 the impending exit of the UK from the EU
may affect tax rates that exist at present, which could erode the
margins that Safeland is able to attain on its trades, and may
adversely impact upon property values.
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.
Larry Lipman
Managing Director
22 August 2016
Safeland plc
Consolidated Income Statement
Year Ended 31 March 2016
Note 2016 2015
GBP'000 GBP'000
Revenue 3 21,116 10,256
Cost of sales 3 (14,003) (7,495)
-------- --------
Gross profit 7,113 2,761
Administrative expenses (1,287) (1,570)
Gain on revaluation of investment properties 42 225
(Loss)/profit on disposal of investment
property (33) 5,272
Profit on sale of investment in jointly
controlled entity - 209
Share of profit of jointly-controlled entity - 11
Dividend from Investment 13 11
Share of results of associate 23 29
-------- --------
Operating profit 5,871 6,948
Finance income 520 167
Finance costs (334) (403)
-------- --------
Profit before tax 3 6,057 6,712
Tax (1,522) (979)
-------- --------
Profit for the financial year attributable
to owners of the parent company 4,535 5,733
======== ========
Basic earnings per share 4 27.95p 34.02p
Diluted earnings per share 4 15.45p 15.62p
The revenue and operating result for the year is derived from
continuing operations in the United Kingdom.
Safeland plc
Consolidated Statement of Comprehensive Income
Year ended 31 March 2016
2016 2015
GBP'000 GBP'000
Profit for the year 4,535 5,733
-------- --------
Other comprehensive (expense)/income
Fair value (losses)/gains on available
for sale financial assets (139) 82
Other comprehensive (expense)/income
for the year, net of tax (139) 82
-------- --------
Total comprehensive income for the
year attributable to owners of the
parent company 4,396 5,815
======== ========
Safeland plc Company Registration Number: 2012015
Consolidated Statement of Financial Position
31 March 2016
Note 2016 2015
GBP'000 GBP'000
(i)
Non-current assets
Property, plant and equipment 1,904 1,981
Investment properties 5 1,123 2,693
Investments in associate 121 123
Available-for-sale investments 832 307
Trade and other receivables 7 8,503 7,985
-------- --------
Total non-current assets 12,483 13,089
-------- --------
Current assets
Trading properties 6 14,838 12,748
Trade and other receivables 7 381 364
Cash and cash equivalents 2,988 454
-------- --------
Total current assets 18,207 13,566
-------- --------
Total assets 30,690 26,655
-------- --------
Current liabilities
Bank loans and overdrafts 8 - 1,258
Trade and other payables 495 1,762
Corporation tax payable 1,450 1,696
-------- --------
Total current liabilities 1,945 4,716
-------- --------
Non-current liabilities
Bank loans 8 10,927 7,185
Deferred tax liabilities 72 -
-------- --------
Total non-current liabilities 10,999 7,185
-------- --------
Total liabilities 12,944 11,901
-------- --------
Net assets 17,746 14,754
======== ========
Equity
Share capital 778 843
Share based payment reserve 354 486
Investment revaluation reserve (52) 87
Capital redemption reserve 65 -
Retained earnings 16,601 13,338
-------- --------
Total equity attributable to owners
of the parent company 17,746 14,754
======== ========
(i) Restated (see notes 5 & 6)
Safeland plc
Consolidated Statement of Changes in Equity
31 March 2016
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
------------------------ --------- --------- ------------ --------- ------------- ---------- ---------
Transactions
with owners
Share based
payment charge
for the year - - - 138 - - 138
Dividend paid - - - (1,809) (1,809)
------------------------ --------- --------- ------------ --------- ------------- ---------- ---------
Balance at 31
March 2015 843 - - 486 87 13,338 14,754
------------------------ --------- --------- ------------ --------- ------------- ---------- ---------
Comprehensive
income
Profit for the
year - - - - - 4,535 4,535
Revaluation
of available-for-sale
investments - - - - (139) - (139)
------------------------ --------- --------- ------------ --------- ------------- ---------- ---------
Total comprehensive
income - - - - (139) 4,535 4,396
------------------------ --------- --------- ------------ --------- ------------- ---------- ---------
Transactions
with owners
Debit relating
to equity-settled
share based
payments - - - (132) - - (132)
Dividends paid - - - - - (529) (529)
Purchase of
own shares (65) - 65 - - (743) (743)
------------------------ --------- --------- ------------ --------- ------------- ---------- ---------
Total transactions
with owners (65) - 65 (132) - (1,272) (1,404)
------------------------ --------- --------- ------------ --------- ------------- ---------- ---------
Balance at 31
March 2016 778 - 65 354 (52) 16,601 17,746
------------------------ --------- --------- ------------ --------- ------------- ---------- ---------
Safeland plc
Consolidated Statement of Cash Flows
Year ended 31 March 2016
Note 2016 2015
GBP'000 GBP'000
Operating activities
Cash generated/(outflow) from operations 2,321 (2,376)
Interest paid (292) (403)
Corporation tax paid (1,695) (132)
-------- --------
Net cash generated/(outflow) from operating
activities 334 (2,911)
-------- --------
Investing activities
Interest received 1 1
Purchase of property, plant and equipment (105) (2,003)
Purchase of available-for-sale investments (664) (175)
Distributions from associate 25 32
Other dividends received 13 -
Proceeds from sale of investment properties 1,637 4,230
Proceeds from sale of property, plant and equipment 82 119
-------- --------
Net cash generated from investing activities 989 2,204
-------- --------
Financing activities
Purchase of own share capital (743) -
Dividends paid to equity shareholders (529) -
New loans 3,742 9,258
Loan repayments (1,259) (9,100)
Net cash generated from financing activities 1,211 158
-------- --------
Net increase/(decrease) in cash and cash equivalents 2,534 (549)
Cash and cash equivalents at beginning of year 454 1,003
Cash and cash equivalents at end of year 2,988 454
======== ========
Safeland plc
Notes
31 March 2016
1. Basis of preparation
On 22 August 2016, the Directors approved this preliminary
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 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 2016.
The financial information for the year ended 31 March 2016 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 2016 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting.
The accounting policies applied in this announcement are
consistent with those of the annual financial statements for the
year ended 31 March 2016, as described in those annual financial
statements.
2. Significant Accounting Policies
Revenue
Revenue is stated net of VAT and comprises rental income,
proceeds from sales of trading properties, fees, commissions and
other income.
Sales of trading properties are recognised on legal completion
of a contract. This reflects the point of transfer of risk and
rewards when trading property is sold.
Rental income from investment and trading properties leased out
under operating leases is recognised in the Income Statement on a
straight-line basis over the term of the lease. Contingent rents
which comprise turnover rents are recognised as income in the
periods in which they are earned. Rent reviews are recognised when
such reviews have been agreed with tenants. Lease incentives are
recognised as an integral part of the net consideration for the use
of the property and amortised on a straight-line basis over term of
lease, or the period to the first tenant break, if shorter.
Revenue in the previous year arising from deferred consideration
in the form of four completed houses in a residential development
to be undertaken on the site of the Chandos Tennis Club in the next
two to three years is based on a valuation by the directors,
discounted to a present-day value using the weighted average cost
of capital.
Other fees in relation to property management are recognised on
a straight-line basis over the term of management contracts.
Hotel revenue comprises revenues from overnight hotel
accommodation, banqueting facility hire and sales of food and
beverages. All revenues are recognised when the service is
provided.
Investment properties
Investment properties are those properties that are held either
to earn rental income or for capital appreciation or both.
Investment properties are measured and stated at fair value in
the statement of financial position. Valuation surpluses and
deficits arising in the period are included in profit or loss.
The gain or loss arising on the disposal of a property is
determined as the difference between the sales proceeds and the
fair value of the asset at the beginning of the period and is
recognised in the income statement.
Investment properties may be freehold properties or leasehold
properties. For leasehold properties that are classified as
investment properties, the associated leasehold obligations, if
material, are accounted for as finance lease obligations.
Available-for-sale investments
Available-for-sale investments are non-derivative financial
assets that are designated as available-for-sale.
The investments are recognised initially at fair value plus
transaction costs and thereafter carried at fair value with gains
and losses taken to other comprehensive income. The gains and
losses taken to other comprehensive income are recycled through the
income statement on realisation. If there is objective evidence
that the asset is impaired, the cumulative loss that had been
recognised in other comprehensive income is removed from equity and
recognised in the income statement. The amount removed from equity
and recognised in the income statement is the difference between
the acquisition cost (net of any principal repayment and
amortisation) and current fair value, less any impairment loss on
that financial asset previously recognised in the income
statement.
Impairment losses recognised in the income statement are not
reversed through profit or loss.
Trading properties
Properties held for development and resale are classified as
trading properties and are shown at the lower of cost and net
realisable value. Cost comprises purchase price, acquisition costs
and direct expenditure.
Restatement of stock as investment property
Triangle Estates Limited (TEL) was acquired by the Group on 19
December 2014. It was trading as an investment company on
acquisition and in the opinion of the directors has continued to do
so.
As properties owned by TEL became vacant, the directors decided
to sell each of them after undertaking limited works to bring them
into an improved state of disposal.
The directors intend to continue holding the remaining property
assets within the portfolio as investments for the foreseeable
future, and undertook a refurbishment of the ground floor retail
unit, from which rent is currently being earned.
At 31 March 2015, the carrying value of the Group's trading
properties included an amount of GBP1.97m that should have been
classified as investment properties. This has now been restated for
that year ended 31 March 2015 in the comparative figures.
During the year ended 31 March 2016, the Group continued to hold
the remaining commercial units and the directors' estimate of the
carrying value of these remaining investment properties in TEL at
31 March 2016 was GBP0.4m.
This is further set out in more detail in notes 5 and 6
below.
3. Operational Segments
The Group complies with IFRS 8 Operating segments, which
requires operating segments to be identified on the basis of
internal reports about components of the Group that are reviewed
regularly by the chief operating decision maker, identified as the
executive directors, to allocate resources to the segments and to
assess their performance.
The segments are defined by the types of product and services
which each reportable segment derives its revenue.
The measure of segment result is considered to be the IFRS
measure of operating profit before administrative expenses. The
Board reviews administrative expenses, finance expenses and tax at
Group level and does not allocate these costs to segments.
The information reviewed by the chief operating decision maker,
or otherwise regularly provided to the chief operating decision
maker does not include information on net assets. The cost to
develop this information would be excessive in comparison to the
value that would be derived.
All activities are based in the United Kingdom.
The segmental information of the Group's results for the year
ended 31 March 2016 was as follows:
Property Hotel Operation Property Property Total
Trading GBP'000 Management Investment GBP'000
GBP'000 GBP'000 GBP'000
Revenue 20,110 848 17 141 21,116
Cost of
Sales (13,226) (777) - - (14,003)
----------------- --------- ---------------- ------------ ------------ ---------
Gross Profit 6,884 71 17 141 7,113
Dividend
from associate - - 13 - 13
Profit on
disposal
of investment
properties - - - 9 9
Share of
profit of
associate - - 23 - 23
----------------- --------- ---------------- ------------ ------------ ---------
Operating
profit before
administration
expenses 6,884 71 53 150 7,158
Administrative
expenses (1,287)
Finance
income 520
Finance
costs (334)
----------------- --------- ---------------- ------------ ------------ ---------
Profit before
tax 6,057
----------------- --------- ---------------- ------------ ------------ ---------
The segmental information of the Group's results for the year
ended 31 March 2015 was as follows:
Property Hotel Operation Property Property Total
Trading GBP'000 Management Investment GBP'000
GBP'000 GBP'000 GBP'000
Revenue 9,144 936 30 146 10,256
Cost of Sales (6,767) (728) - - (7,495)
--------------------- --------- ---------------- ------------ ------------ ---------
Gross Profit 2,377 208 30 146 2,761
Share of profit
of jointly
controlled
entity - - 11 - 11
Dividend from
associate - - 11 - 11
Profit on
disposal of
investment
properties - - - 5,272 5,272
Profit on
disposal of
investment
in jointly
controlled
entity - - - 209 209
Share of profit
of associate - - 29 - 29
Gain on revaluation
of investment
properties - - - 225 225
--------------------- --------- ---------------- ------------ ------------ ---------
Operating
profit before
administration
expenses 2,377 208 81 5,852 8,518
Administrative
expenses (1,570)
Finance income 167
Finance costs (403)
--------------------- --------- ---------------- ------------ ------------ ---------
Profit before
tax 6,712
--------------------- --------- ---------------- ------------ ------------ ---------
4. Earnings per Share
The calculation of the basic and diluted earnings per share is
based on the following data:
2016 2015
GBP'000 GBP'000
Profit for the year attributable to equity
holders of the company 4,535 5,733
======== ========
2016 2015
Number Number
'000 '000
Weighted average number of ordinary shares
for the purposes of basic earnings per share 16,224 16,851
Effect of dilutive potential ordinary shares 13,138 19,865
------- -------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 29,362 36,716
======= =======
Net asset value at 31 March 2016 was GBP17,746,000 (2015:
GBP14,754,000), equivalent to 114p per ordinary share (2015: 87p),
though there were fewer shares in issue at 31 March 2016 than a
year previously.
5. Investment Properties
2016 2015
GBP'000 GBP'000
(i)
Fair value
At 1 April 2015 2,693 5,343
Addition of properties in the year - 1,970
Disposal of properties in the year (1,612) (4,845)
Increase in fair value during the year 42 225
-------- --------
At 31 March 2016 1,123 2,693
======== ========
(i) Restated
The fair value of the investment properties at 31 March 2016
comprises freehold properties of GBP665,000 (2015: GBP2,235,000)
and long leasehold properties of GBP458,000 (2015: GBP458,000).
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 2016, 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.
The Group has pledged investment properties with a carrying
value of GBP1,110,000 (2015: GBP2,673,000) to secure banking
facilities granted to the Group.
The fair value of the Group's investment properties at 31 March
2016 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 GBP132,000 (2015: GBP146,000). Direct
operating expenses arose on these properties during the year of
GBP1,000 (2015: GBP1,000).
The historical cost of investment properties included in the
financial statements at 31 March 2016 is GBP1,081,000 (2015:
GBP2,693,000 as restated) of which GBP665,000 (2015: GBP2,148,000
as restated) are freehold and GBP458,000 (2015: GBP545,000) are
long leasehold properties.
6. Trading Properties
2016 2015
GBP'000 GBP'000
(i)
Properties for resale 14,838 12,748
-------- --------
(i) Restated
The Group has pledged properties for resale with carrying value
of GBP14,838,000 (2015: GBP12,748,000) to secure banking facilities
granted to the Group.
Properties for resale were reviewed for impairment as at 31
March 2016; 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.
7. Trade and Other Receivables
2016 2015
GBP'000 GBP'000
Trade receivables 31 32
Other receivables 8,847 8,250
Prepayments and accrued income 6 67
-------- --------
8,884 8,349
-------- --------
The directors consider that the carrying amount of trade and
other receivables approximates to their fair value. Of the other
receivables, GBP8,503,000 (2015: GBP7,985,000) is deferred
consideration on the sale of the Chandos Tennis Club and is shown
as a non-current asset.
8. Bank Loans
2016 2015
GBP'000 GBP'000
Falling due within 1 Year
Bank loans - 1,258
-------- --------
Falling due over 1 Year
Bank loans 11,000 7,300
Unamortised borrowing costs (73) (115)
-------- --------
10,927 7,185
-------- --------
There were no breaches of bank loan covenants as at 31 March
2016 or 31 March 2015.
All of the Group's bank loans and overdrafts disclosed above
comprise borrowings in sterling. The bank loans are secured on
investment and trading properties owned by the Group totalling
GBP15,948,000 (2015: GBP15,421,000 as restated).
The Group had undrawn committed borrowing facilities as at 31
March 2016 of GBP1,500,000 (2015: GBP5,200,000).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QKLFFQVFLBBZ
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August 22, 2016 02:00 ET (06:00 GMT)
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