Final Results

RNS Number : 7167N

Safeland PLC

11 August 2017

 

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").  

Safeland plc

("Safeland", the "Company" or the "Group")

Final Results for the Year Ended 31 March 2017

Managing Director's Statement

Key Achievements

I am pleased to report on another successful year for the Company, albeit that the year to 31 March 2017 saw lower levels of turnover and profitability than the preceding year.

In the year to 31 March 2016, we were able to pay an interim dividend of 1.5p per share, and although there was no interim dividend this year, we are pleased to continue the trend of distributing a share of profits to our shareholders by recommending a final dividend of 1p per share (2016: nil) to be paid on 29 September 2017 to shareholders on the register on 25 August 2017.

Having sold 31 residential units in Wimbledon during the preceding year, the Company subsequently sold the long leasehold ground rents of the development in the year to 31 March 2017, exiting a successful transaction at the site.

We completed the refurbishment of a substantial detached freehold house in London N2, the acquisition of which was announced in my statement last year, and I am delighted that the sale of the house was completed profitably.

Last year's statement announced the planning permission obtained for the conversion into apartments of a hotel in Muswell Hill, London N10 which had been owned and operated by the Group. Trading at the hotel ceased in August 2016 and in September 2016 we commenced construction work to provide basement car parking and 8 one-bed flats, 8 two-bed flats and 2 three-bed flats. We remain on course to complete the building work towards the end of 2017, as announced in our interim results to 30 September 2016. Revenue from the hotel in 2017 has been shown as discontinued operations in the income statement.

Other property transactions completed by the Company in the year to 31 March 2017 included the purchase and sale of properties in New Barnet, Herts; East Finchley, London N2; Wembley, Middlesex; and on a site near our head office in Hampstead Garden Suburb, London N2.

Continuing the theme of purchasing our own shares - in the prior financial year there had been two such transactions totalling 1,290,800 shares - this financial year we made a further two buy-backs, totalling 193,000 shares. The directors continued to consider that the acquisition and cancellation of these shares would enhance the value of the remaining shares in issue.

Since the balance sheet date, the Company has taken advantage of opportunities to acquire for cancellation several further tranches of shares, totalling another 275,000 shares.

Financial Results

Group revenue for the year to 31 March 2017 of £12.9 million comprised sales of development properties, rental income, management fees and (for part of the year) revenue from the Muswell Hill hotel, but was below the £21.1 million reported for the preceding year, in which there was more activity.

Gross profit of £2.46 million was below the £7.1 million for the year to 31 March 2016, and operating profit declined too, from £5.8 million to £1.9 million, reflecting my statement at the half-year that we are extremely selective on transactions until the outlook on the economy in general and the property sector specifically, show signs of strengthening.

Further indicating our cautious views and reduced activity, trading stock has decreased in value from £14.8 million at 31 March 2016 to £9.3 million at 31 March 2017. The Statement of Financial Position shows gearing at 31 March 2017 of 12%, reduced from 45% at 31 March 2016.

I am pleased to report that our net asset value (NAV) rose from £17.7 million (equivalent to 114 pence per share) at 31 March 2016, to £19.9 million (equivalent to 129 pence per share) at 31 March 2017. This is a 13% increase, albeit that for the second consecutive year there were fewer shares in issue at the year-end than 12 months previously, as a result of the buybacks and cancellation referred to above.

Due to the fall in the share price over the course of the financial year, total shareholder returns for the year decreased by 2.7% (2016: 16% increase).

Outlook

I repeat the statement in the most recent interims and 2016's full-year results, that the market appears to us to be constrained by an economic outlook which in turn is affected by political conditions in the UK, in the EU, and worldwide, which I believe have combined to create a more cautious environment.

This is not stopping us from adding value to the Company's existing stock through planning or development, and we remain confident that our skills will enable us to make selective acquisitions and profitable disposals.

Larry Lipman

Managing Director

10 August 2017

Enquiries

Safeland plc	[phone]
Larry Lipman, Managing Director
Stockdale Securities (Nominated Adviser and Broker)
Tom Griffiths	[phone]

For more information visit: www.safeland.co.uk

 

Condensed Consolidated Income Statement

Year Ended 31 March 2017

	Note		2017 £'000	2016 £'000
Revenue
Continuing	3		12,695	20,268
Discontinued	3		277	848
			12,972	21,116
Cost of sales			(10,517)	(14,003)
Gross profit			2,455	7,113
Administrative expenses			(1,721)	(1,287)
Gain on revaluation of investment properties			459	42
Profit/(loss) on disposal of investment property			694	(33)
Dividend from investment			5	9
Share of results of associate			31	27
Operating profit			1,923	5,871
Operating profit - continuing			1,877	5,800
Operating profit - discontinued			46	71
			1,923	5,871
Finance income			554	520
Finance costs			(448)	(334)
Profit before tax			2,029	6,057
Tax			293	(1,522)
Profit for the financial year attributable to owners of the parent company			2,322	4,535
Basic earnings per share	4		14.93p	27.95p
Diluted earnings per share	4		11.69p	15.45p
Earnings per share - discontinued activities	4		0.03p	0.04p

Condensed Consolidated Statement of Comprehensive Income

Year ended 31 March 2017

				2017 £'000	2016 £'000
Profit for the year				2,322	4,535
Other comprehensive income
Fair value losses on available-for-sale financial assets				(30)	(139)
Other comprehensive income for the year, net of tax				(30)	(139)
Total comprehensive income for the year  attributable to owners of the parent company				2,292	4,396

Condensed Consolidated Statement of Financial Position

31 March 2017                                                                                                  

	Note	2017 £'000	2016 £'000
Non-current assets
Property, plant and equipment		1,885	1,904
Investment properties	6	1,182	1,123
Investment in associate		127	121
Available-for-sale investments		802	832
Trade and other receivables	8	-	8,503
Total non-current assets		3,996	12,483
Current assets
Trading properties	7	9,348	14,838
Trade and other receivables	8	9,209	381
Cash and cash equivalents		5,280	2,988
Total current assets		23,837	18,207
Total assets		27,833	30,690
Current liabilities
Bank loans and overdrafts	9	7,639	-
Trade and other payables		232	495
Corporation tax payable		-	1,450
Total current liabilities		7,871	1,945
Non-current liabilities
Bank loans	9	-	10,927
Deferred income tax liabilities		32	72
Total non-current liabilities		32	10,999
Total liabilities		7,903	12,944
Net assets		19,930	17,746
Equity
Share capital		768	778
Share-based payment reserve		354	354
Investment revaluation reserve		(82)	(52)
Capital redemption reserve		75	65
Retained earnings		18,815	16,601
Total equity attributable to owners of the parent company		19,930	17,746

Condensed Consolidated Statement of Changes in Equity

31 March 2017

	Share Capital £'000	Capital redemption reserve £'000	Share-based payment reserve £'000	Investment revaluation reserve £'000	Retained earnings £'000	Total equity £'000
Balance at 1 April 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
Share-based payment charge for the year	-	-	(132)	-	-	(132)
Dividend 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
Comprehensive income
Profit for the year	-	-	-	-	2,322	2,322
Revaluation of available-for-sale investments	-	-	-	(30)	-	(30)
Total comprehensive income	-	-	-	-	2,322	2,292
Transactions with owners
Share-based payment charge for the year	-	-	-	-	-	-
Purchase of own shares	(10)	10	-	-	(108)	(108)
Total transactions with owners	(10)	10	-	-	(108)	(108)
Balance at 31 March 2017	768	75	354	(82)	18,815	19,930

Condensed Consolidated Statement of Cash Flows

Year ended 31 March 2017

		2017 £'000	2016 £'000
Operating activities
Cash inflow from operations		6,523	2,321
Interest paid		(406)	(292)
Corporation tax paid		(1,464)	(1,695)
Net cash inflow from operating activities		4,653	334
Investing activities
Interest received		1	1
Purchase of property, plant and equipment		(143)	(105)
Purchase of available-for-sale investments		-	(664)
Distributions from associate		25	33
Other dividends received		6	5
Proceeds from sale of investment properties		1,094	1,637
Proceeds from sale of property, plant and equipment		94	82
Net cash generated from investing activities		1,077	989
Financing activities
Purchase of own share capital		(108)	(743)
Dividends paid to equity shareholders		-	(529)
New loans		2,001	3,742
Loan repayments		(5,331)	(1,259)
Net cash (used in)/generated from financing activities		(3,438)	1,211
Net increase in cash and cash equivalents		2,292	2,534
Cash and cash equivalents at beginning of year		2,988	454
Cash and cash equivalents at end of year		5,280	2,988

Notes

31 March 2017

1.    Basis of preparation

On 10 August 2017, the Directors approved this 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 2017. The financial information for the year ended 31 March 2016 has been derived from the Group's statutory accounts for that year, as filed with the Registrar of Companies.

The financial information for the year ended 31 March 2017 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 2017 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 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.

Hotel revenue comprised revenues from overnight hotel accommodation, banqueting facility hire and sales of food and beverages. All revenue was recognised when the service was provided. The hotel closed and ceased to trade on 3 August 2016.

Other fees in relation to property management are recognised on a straight-line basis over the term of management contracts.

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 year 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.

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.

3.    Operational Segments

All activities are based in the United Kingdom.

The segmental information of the Group's results for the year ended 31 March 2017 was as follows:

	Property trading £'000	Hotel Operation (1) £'000	Property Management £'000	Property investment £'000	Total £'000
Revenue	12,480	277	-	215	12,972
Cost of sales	(10,286)	(231)	-	-	(10,517)
Gross profit	2,194	46	-	215	2,455
Profit on disposal of investment properties	-	-	-	694	694
Gain on revaluation of investment properties	-	-	-	459	459
Share of profit of associate	-	-	31	-	31
Operating profit before administration expense	2,194	46	31	1,368	3,639
Administrative expenses					(1,721)
Dividend from investments					5
Finance income					554
Finance costs					(448)
Profit before tax					2,029

	Property Trading £'000	Hotel Operation (1) £'000	Property Management £'000	Property investment £'000	Unallocated £'000	Total £'000
Segment assets	18,456	-	-	1,182	8,195	27,833
Segment liabilities	(7,639)	-	-	-	(264)	(7,903)
Net assets	10,817	-	-	1,182	7,931	19,930
Capital expenditure	-	-	-	-	5	5
Depreciation	-	-	-	-	81	81

(1)  The hotel business ceased to operate with effect from 3 August 2016 and has been closed permanently. The property is currently being refurbished into 18 apartments.

The segmental information of the Group's results for the year ended 31 March 2016 was as follows:

	Property Trading £'000	Hotel Operation £'000	Property Management £'000	Property investment £'000	Total £'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
Share of profit of associate	-	-	23	-	23
Operating profit before administration expense	6,884	71	53	141	7,158
Administrative expenses					(1,287)
Dividends from investments					9
Finance income					520
Finance costs					(334)
Profit before tax					6,057

	Property Trading £'000	Hotel Operations £'000	Property Management £'000	Property investment £'000	Unallocated £'000	Total £'000
Segment assets	23,342	496	-	1,123	5,729	30,690
Segment liabilities	(10,927)	(219)	-	-	(1,798)	(12,944)
Net assets	12,415	277	-	1,123	3,931	17,746
Capital expenditure	-	-	-	-	105	105
Depreciation	-	-	-	-	85	85

4.    Earnings per Share

The calculation of the basic and diluted earnings per share is based on the following data:

	2017          £'000	2016         £'000
Profit for the year attributable to equity holders of the company	2,322	4,535

		2017         Number	2016          Number
Weighted average number of ordinary shares for the purposes of basic earnings per share (continued and discontinued)		15,555,095	16,224,288
Effect of dilutive potential ordinary shares		12,042,793	13,138,490
Weighted average number of ordinary shares for the purposes of diluted earnings per share		27,597,888	29,362,778

5.    Dividends

The Directors recommend a final dividend of 1 pence per share (2016: nil). During the year, no interim dividend was paid (2016: 1.5 pence per share).

6.    Investment Properties

		2017        £'000	2016       £'000
Fair value
At 1 April		1,123	2,693
Disposal of properties in the year		(400)	(1,612)
Increase in fair value during the year		459	42
At 31 March		1,182	1,123

The fair value of the investment properties at 31 March 2017 comprises freehold properties of £725,000 (2016: £665,000) and long leasehold properties of £457,000 (2016: £458,000). 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 2017, 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 £1,182,000 (2016: £1,110,000) to secure banking facilities granted to the Group.

The fair value of the Group's investment properties at 31 March 2017 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.

7.    Trading Properties

	2017         £'000	2016       £'000
Properties for resale	9,348	14,838

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.

8.    Trade and Other Receivables

	2017         £'000	2016       £'000
Trade receivables	80	31
Other receivables	9,122	8,847
Prepayments and accrued income	7	6
	9,209	8,884
Current	9,209	381
Non-current	-	8,503
	9,209	8,884

The directors consider that the carrying amount of trade and other receivables is no less than their fair value. Of the other receivables, £9,058,000 (2016: £8,503,000) is deferred consideration on the sale of the Chandos Tennis Club and no amounts are beyond their due date.

9.    Bank Loans

FALLING DUE WITHIN ONE YEAR	2017         £'000	2016       £'000
Bank loans	7,670	-
Unamortised borrowing costs	(31)	-
	7,639	-
FALLING DUE AFTER MORE THAN ONE YEAR	2017         £'000	2016         £'000
Bank loans	-	11,000
Unamortised borrowing costs	-	(73)
	-	10,927

	2017         £'000	2016       £'000
The borrowings are repayable as follows:
In the second to fifth years	-	11,000

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 £10,288,000 (2016: £15,948,000).

The Group has a £12,500,000 (2016: £12,500,000) revolving credit facility with Lloyds Bank plc ("the Bank"), secured on certain properties owned by the Group, which is due to expire on 9 December 2017. The facility is based on LIBOR plus a fixed margin. The Group has entered into discussions with the Bank to renew the facility and has received a letter of intent from the bank. A notional amount of £5,000,000 (2016: £5,000,000) has been capped at 3%.

 

END

 

 

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