Final Results

RNS Number : 9420L

Safeland PLC

19 August 2013

 



19 August 2013

Safeland Plc

("Safeland" or the "Company")

Audited final results for the year end 31 March 2013

Chairman's Statement

The year to 31 March 2013 has been a busy one for Safeland plc. The Board has continued to acquire short term development opportunities in the North London area whilst advancing the existing development property portfolio towards completion and onward sale.

Planning permission is progressing for the Chandos Tennis Club and we await the outcome of the planning application. During the year to 31 March 2013 the valuation of this property increased by £225,000 to £4,175,000.

In general, London property values have stopped declining since the recession started in 2007 and Safeland can confidently look forward to an upturn in activity. Now that the market has stabilized, we believe we are in an excellent position to generate future returns for shareholders.

Following the opening of the first hostel by our joint venture 'Safestay', we have been satisfied with the first year's trading to 30 June 2013. Additional suitable sites are proving difficult to identify but we are confident that the brand is capable of expansion.

Financial highlights

In October 2012, we agreed terms for a new three year revolving credit facility of £12.5m with our principal lender to provide Safeland with the necessary cashflow and leverage to finance future opportunities. The Group entered into derivative financial instruments to fix or cap interest rates of 58% of the loan outstanding at the year end to mitigate future interest rate risk.

The statement of financial position has strengthened significantly during the year with gearing of 65% as at 31 March 2013 (2012: 80%).

Of our two key performance indicators, net asset value per share was up 14% at 57p (2012: 50p) and total shareholder return was 6.1% (2012: 6.5%). The positive result on the two KPIs adds to the confidence shareholders can have that the Group is making progress in an improving market.

The quarterly loan covenant report in April 2013 to the principal lenders has the Loan to value at 33% against the Group covenant of 65%.

Nature and effect of misappropriated monies

In October and November 2012, the Company announced the discovery of a series of fraudulent transactions. The aggregate amount of the sums lost to the Company through fraudulent transactions was approximately £1.525m. Of that sum, approximately £1.2m related to the financial year ended 31 March 2012 with the balance relating to the financial year ended 31 March 2013.

The Company has to date recovered £1.3m and the Board is continuing to pursue outstanding monies.

The losses discovered are significant and the Board concluded that the financial statements as originally issued for the year ended 31 March 2012 were subject to material error. Accordingly the Group's financial statements for the year ended 31 March 2013 comparative figures have been restated to reflect the loss of funds. Details of the restatements are set out in note 2. Funds misappropriated, funds recovered and applicable legal fees are treated as a net income of £809,000 in the current financial period.

In October 2012, the previous auditors resigned as a result of an unmanageable conflict of interest. They were replaced with Grant Thornton UK LLP in November 2012.

Board appointment

In January 2013 we were joined by Colin Stone who, for the previous six years, was the financial controller for the London property developer Quintain Estates and Development plc. In May 2013 the Group appointed Colin to the Board as finance director.

Outlook

We believe that Safeland is in a strong position to move forward as the market improves, but also has the necessary resources, expertise and strategies to minimise the impact of any sudden unexpected market volatility.

Raymond Lipman
Chairman

16 August 2013

The Annual Report and Accounts will be sent to shareholders shortly and will be available today on the Company's website, www.safeland.co.uk.

Enquiries:

Safeland plc                                                                 

Larry Lipman, Managing Director

Colin Stone, Finance Director

Tel: [phone]

 www.safeland.co.uk

Westhouse Securities Limited

Tom Griffiths

T: 020 7601 6100

Consolidated Income Statement

Year ended 31 March 2013

	Note		2013 £'000	2012 Restated £'000
Revenue			8,587	15,129
Cost of sales			(7,106)	(13,145)
Gross profit			1,481	1,984
Administrative expenses			(1,677)	(1,665)
Gain on revaluation of investment properties			225	1,355
Share of profit/(loss) of joint controlled entity			446	(8)
Share of results of associate			20	36
Impairment of available-for-sale investments			-	(60)
Operating profit			495	1,642
Exceptional profit/(loss) arising from misappropriation of funds			809	(1,232)
Finance income			2	10
Finance costs			(278)	(389)
Profit before tax			1,028	31
Tax			132	(212)
Profit/(loss) for the financial year attributable to owners of the parent company			1,160	(181)
Basic earnings/(loss) per share	3		6.88p	(1.07)p
Diluted earnings/( loss) per share	3		6.79p	(1.07)p

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 2013

				Note	2013 £'000	2012 Restated £'000
Profit/(loss) for the year					1,160	(181)
Other comprehensive income
Fair value losses on available for sale financial assets					(2)	(10)
Tax on items taken directly to other comprehensive income					-	3
Other comprehensive income for the year, net of tax					2	(7)
Total comprehensive income/(loss) for the year  attributable to owners of the parent company					1,158	(188)

Consolidated Statement of Financial Position

31 March 2013

	Note	2013 £'000	2012 Restated £'000
Non-current assets
Property, plant and equipment		133	252
Investment properties	4	5,018	4,793
Investments in jointly controlled entity		446	-
Investment in associate		103	153
Available-for-sale investments		50	52
Total non-current assets		5,750	5,250
Current assets
Trading properties	5	9,864	10,227
Trade and other receivables		1,731	1,139
Cash and cash equivalents		712	457
Total current assets		12,307	11,823
Total assets		18,057	17,073
Current liabilities
Bank loans		-	7,190
Trade and other payables Derivative financial instruments		750 10	607 21
Total current liabilities		760	7,818
Non-current liabilities
Bank loans		6,878	-
Deferred income tax liabilities		756	888
Total non-current liabilities		7,634	888
Total liabilities		8,394	8,706
Net assets		9,663	8,367
Equity
Share capital		843	843
Share premium account		5,351	5,351
Capital redemption reserve		847	847
Share based payment reserve		211	73
Investment revaluation reserve		5	7
Retained earnings		2,406	1,246
Total equity attributable to owners of the parent company		9,663	8,367

 Consolidated Statement of Changes in Equity

31 March 2013

	Share Capital £'000			Share premium account £'000		Capital redemption reserve £'000	Share based payment reserve £'000	Investment revaluation reserve £'000	Retained earnings £'000	Total equity £'000
Balance at 1 April 2012 (as restated)	843			5,351		847	73	7	1,246	8,367
Comprehensive income
Profit for the year	-			-		-	-	-	1,160	1,160
Fair value losses on available-for-sale investments	-		-			-	-	(2)	-	(2)
Total comprehensive income	-		-			-	-	(2)	1,160	1,158
Transactions with owners
Share based payment charge for the year	-				-	-	138	-	-	138
Balance at 31 March 2013	843				5,351	847	211	5	2,406	9,663

Consolidated Statement of Changes in Equity

31 March 2013

	Share Capital £'000	Share premium account £'000	Capital redemption reserve £'000	Share based payment reserve £'000	Investment revaluation reserve £'000	Retained earnings £'000	Total  equity £'000
Balance at 1 April 2011	843	5,351	847	100	14	1,327	8,482
Comprehensive income
Profit for the year to 31 March 2012 as originally stated	-	-	-	-	-	493	493
Effect of restatement in the year to 31 March 2012	-	-	-	-	-	(674)	(674)
Loss for the year to March 2012 (as restated)	-	-	-	-	-	(181)	(181)
Fair value losses on available-for-sale investments	-	-	-	-	(10)	-	(10)
Tax on items taken directly to other comprehensive income	-	-	-	-	3	-	3
Total comprehensive income	-	-	-	-	(7)	(181)	(188)
Transactions with owners
Share based payment charge for the year	-	-	-	73	-	-	73
Transferred to retained earnings following lapse of share options	-	-	-	(100)	-	100	-
Balance at 31 March 2012 (as restated)	843	5,351	847	73	7	1,246	8,367

Consolidated Statement of Cashflows

Year ended 31 March 2013

	Note	2013 £'000	2012 Restated £'000
Operating activities
Cash generated from operations	6	648	7,989
Interest paid		(227)	(477)
Net cash generated from operating activities		421	7,512
Investing activities
Interest received		2	7
Dividends received		-	3
Purchase of property, plant and equipment		(105)	(175)
Investment in jointly controlled entity		-	(8)
Distributions from associate		70	35
Proceeds from sale of property, plant and equipment		179	106
Net cash generated/(outflow) from investing activities		146	(32)
Financing activities
New loans		6,878	900
Loan repayments		(7,190)	(7,882)
Net cash outflow from financing activities		(312)	(6,982)
Net increase in cash and cash equivalents		255	498
Cash and cash equivalents at beginning of year		457	(41)
Cash and cash equivalents at end of year		712	457

NOTES

1.            BASIS OF PREPARATIOn

On 16 August 2013, 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 years ended 31 March 2013 or 31 March 2012.

The financial information for the year ended 31 March 2013 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 2013 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The financial information for the year ended 31 March 2012 is derived from the statutory financial statements for that year, prepared under IFRS, upon which the auditors have reported and have been filed with the Registrar of Companies. 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 2012, as described in those annual financial statements.

As mentioned in the Chairman Statement and note 2 below, the comparative figures for the year ended 31 March 2012 have been restated.

2.         Restatement of financial statements to include the discovery of misappropriated funds

		Effect of
Income statement 31 March 2012	Original	Restatement	Revised
	31 March	31 March	31 March
	2012	2012	2012
	£000	£000	£000
Revenue	15,129	-	15,129
Cost of sales	(13,220)	75	(13,145)
Gross profit	1,909	75	1,984
Administrative expenses	(2,148)	483	(1,665)
Gain on revaluation of investment properties	1,355	-	1,355
Share of loss of jointly controlled entity	(8)	-	(8)
Share of results of associate	36	-	36
Impairment of available for sale investments	(60)	-	(60)
Operating profit	1,084	558	1,642
Exceptional loss arising from misappropriation of funds	-	(1,232)	(1,232)
Finance income	10	-	10
Finance costs	(389)	-	(389)
Profit before tax	705	(674)	31
Tax	(212)	-	(212)
Restated profit/(loss) for the financial year attributable to owners of the parent company	493	(674)	(181)

Basic earnings/(loss) per share                                                                             2.93p                                                    (1.07p)

Diluted earnings/(loss) per share                                                                        2.77p                                                    (1.07p)

Statement of financial position		Effect of
	Original	Restatement	Revised
	31 March	31 March	31 March
	2012	2012	2012
	£000	£000	£000
Non-current assets
Property plant & equipment	252	-	252
Investment properties	4,793	-	4,793
Investments in associates	153	-	153
Available-for-sale investments	52	-	52
	5,250	-	5,250
Current assets
Trading properties	10,249	(22)	10,227
Trade and other receivables	1,616	(477)	1,139
Cash and cash equivalents	457	-	457
	12,322	(499)	11,823
Total assets	17,572	(499)	17,073
Current liabilities
Bank loans	7,190	-	7,190
Trade and other payables	432	175	607
Derivative financial instruments	21	-	21
	7,643	175	7,818
Non-current liabilities
Deferred income tax liabilities	888	-	888
	888	-	888
Total liabilities	8,531	175	8,706
Net assets	9,041	674	8,367
Equity
Share capital	843	-	843
Share premium account	5,351	-	5,351
Capital redemption reserve	847	-	847
Share based payment reserve	73	-	73
Investment revaluation reserve	7	-	7
Retained earning	1,920	(674)	1,246
Total equity attributable to owners of the parent company	9,041	(674)	8,367

Statement of cash flows		Effect of
	Original	Restatement	Revised
	31 March	31 March	31 March
	2012	2012	2012
	£000	£000	£000
Operating activities
Cash generated from operations	8,024	(35)	7,989
Interest paid	(477)	-	(477)
Net cash generated from operating activities	7,547	(35)	7,512
Investing activities
Interest received	7	-	7
Dividends received	3	-	3
Distribution from associate	-	35	35
Purchase of property, plant and equipment	(175)	-	(175)
Purchase of interest in joint ventures	(8)	-	(8)
Proceeds from sale of property, plant and equipment	106	-	106
Net cash (outflow)/generated from investing activities	(67)	35	(32)
Financing activities
New loans	900	-	900
Loan repayments	(7,882)	-	(7,882)
Net cash outflow from financing activities	(6,982)	-	(6,982)
Net decrease in cash and cash equivalents	498	-	498
Cash and cash equivalents at beginning of year	(41)	-	(41)
Cash and cash equivalents at end of year	457	-	457

3.         Earnings per share

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

		2013           £'000	2012 Restated £'000
Profit/(loss) for the year attributable to equity holders of the company		1,160	(181)

		2013           '000	2012 Restated '000
Weighted average number of ordinary shares for the purposes of basic earnings/(loss) per share		16,851	16,851
Effect of dilutive potential ordinary shares		214	-
Weighted average number of ordinary shares for the purposes of diluted earnings/(loss) per share		17,065	16,851

There is no dilutive effect of potential ordinary shares for 2012 as there is a loss for the year.

4.         investment properties

		2013        £'000	2012 Restated £'000
Fair value
At 1 April 2012		4,793	3,438
Increase in fair value during the year		225	1,355
At 31 March 2013		5,018	4,793

The fair value of the investment properties at 31 March 2013 comprises freehold properties of £4,440,000 (2012: £4,215,000) and long leasehold properties of £578,000 (2012: £578,000).

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 2012 or 2013.

The Group has pledged investment properties with a carrying value of £4,998,000 (2012: £4,773,000) to secure banking facilities granted to the Group.

The fair value of the Group's investment properties at 31 March 2013 has 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:  

		2013          £'000	2012 Restated       £'000
External independent valuations
- Cushman & Wakefield		4,175	4,555
Directors' valuations		843	238
		5,018	4,793

The directors have valued investment properties which were externally valued in the prior year. The directors have adopted valuations prepared by Cushman and Wakefield dated 17^th October 2012.

5.         TRADING PROPERTIES

	2013          £'000	2012 Restated £'000
Properties for resale	9,864	10,227

The Group has pledged properties for resale with carrying value of £7,268,000 (2012: £10,227,000) to secure banking facilities granted to the Group.

Properties for resale were reviewed for impairment as at 31 March 2013 and as a result there was an impairment of £nil (2012: impairment of £49,000) and this impairment expense is included within cost of sales in the income statement.

The net realisable value of the Group's trading properties at 31 March 2013 has been ascertained using valuations calculated on the basis of market value as defined in the Apportionment and Valuation Manual of the Royal Institution of Chartered Surveyors. Each property is stated at the lower of cost and net realisable value. The valuations were performed by: 

		2013          £'000	2012 Restated £'000
External independent valuations Cushman & Wakefield		-	4,405
Directors' valuations		9,864	5,822
		9,864	10,227

6.         Notes to the cash flow statement

		2013          £'000	2012 Restated £'000
Profit before tax		1,028	31
Adjustments for:
Depreciation of property, plant and equipment		57	51
Gain on sale of property, plant and equipment		(10)	(20)
Gains on revaluation of investment properties		(225)	(1,355)
Impairment of available for sale investments		-	60
Finance cost		278	389
Finance income		(2)	(10)
Share based payment charge		138	73
Share of results of jointly controlled entity		(446)	8
Share of results of associate		(20)	(36)
Changes in working capital:
Decrease in trading properties		363	8,985
Increase in trade and other receivables		(584)	(366)
Increase in trade and other payables		71	179
Cash generated from operations		648	7,989

 

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