19 August 2014
Safeland Plc
("Safeland" or the "Company")
Audited final results for the year end 31 March 2014
Chairman's Statement
Key achievements
This year has seen significant progress enabling Safeland to make a distribution to its shareholders. As a result of the capital restructuring of reserves announced on 13 March 2014 and the subsequent demerger of the Safestay joint venture on 2 May 2014, Safeland was then able to make its first distribution to shareholders in over a decade.
We have made significant progress with our existing developments and we were able to acquire additional sites in the year which we anticipate will generate future positive returns. Most notably, the planning application for the Chandos Tennis Club in Golders Green has progressed. On 13 February 2014, the London Borough of Barnet passed a resolution to grant planning permission for the development of housing on this site. This was a significant step towards obtaining unconditional planning consent. On 14 May 2014, Safeland also announced that pursuant to the terms of a conditional sales contract with a prominent house builder to develop the site, it would be entitled to receive approximately £13.2 million in staged payments over the next few years, which the directors estimate to be approximately three years, plus potential additional overage revenues.
We were also pleased to announce that we had obtained a residential consent under permitted development rights in relation to part of a property in Wimbledon which was acquired by the Group in 2013. The intention is that the property will be converted into 31 residential units for onward sale.
Financial Review
Net asset value per share up 11% at 63p (2013: 57p)
Total shareholder return was 86.7% (2013: 6.1%)
The Group's revenue in the year to 31 March 2014 of £10.41m (2013 £8.59m) comprises the sales of development properties, rental income, management fees and the hotel operation purchased in the year. This is an increase of 21% resulting in increased operating profit for the year ended 31 March 2014 of £1.31m (2013 £0.50m).
The demerger of the Safestay joint venture on 2 May 2014 enabled Safeland to distribute the shares it received from Safestay plc by way of a dividend in specie, equivalent to 10.73p per Safeland share. The directors do not recommend the payment of a final dividend.
We have increased the value of trading stock over the year by £2.6m to £12.5m as at 31 March 2014 and, as a result, the statement of financial position has gearing of 69% as at that date (2013: 65%).
Outlook
The Group is now poised to complete a number of developments which should ensure that the near term outlook for shareholder returns is at its strongest for some considerable time.
Ray Lipman
Chairman
19 August 2014
Consolidated Income Statement
Year ended 31 March 2014
|
Note |
|
2014 £'000 |
2013 £'000 |
Revenue |
|
|
10,408 |
8,587 |
Cost of sales |
|
|
(8,269) |
(7,106) |
Gross profit |
|
|
2,139 |
1,481 |
Administrative expenses |
|
|
(1,458) |
(1,677) |
Gain on revaluation of investment properties |
|
|
325 |
225 |
Share of profit of joint controlled entity |
|
|
252 |
446 |
Share of results of associate |
|
|
53 |
20 |
Operating profit |
|
|
1,311 |
495 |
Exceptional profit arising from misappropriation of funds |
|
|
- |
809 |
Finance income |
|
|
1 |
2 |
Finance costs |
|
|
(409) |
(278) |
Profit before tax |
|
|
903 |
1,028 |
Tax |
|
|
(93) |
132 |
Profit for the financial year attributable to owners of the parent company |
|
|
810 |
1,160 |
|
|
|
|
|
Basic earnings per share |
2 |
|
4.81p |
6.88p |
Diluted earnings per share |
2 |
|
3.17p |
6.79p |
|
|
|
|
|
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 2014
|
|
|
2014 £'000 |
2013 £'000 |
||
|
|
|
|
|
|
|
Profit for the year |
|
|
|
810 |
1,160 |
|
Other comprehensive income |
|
|
|
|
|
|
Fair value losses on available for sale financial assets |
|
|
|
- |
(2) |
|
Other comprehensive income for the year, net of tax |
|
|
- |
(2) |
||
Total comprehensive income for the year attributable to owners of the parent company |
|
|
|
810 |
1,158 |
|
Consolidated Statement of Financial Position
31 March 2014
Note |
2014 £'000 |
2013 £'000 |
|
Non-current assets |
|
|
|
Property, plant and equipment |
|
151 |
133 |
Investment properties |
3 |
5,343 |
5,018 |
Investments in jointly controlled entity |
|
698 |
446 |
Investment in associate |
|
126 |
103 |
Available-for-sale investments |
|
50 |
50 |
Total non-current assets |
|
6,368 |
5,750 |
Current assets |
|
|
|
Trading properties |
4 |
12,483 |
9,864 |
Trade and other receivables |
|
1,509 |
1,731 |
Cash and cash equivalents |
|
1,003 |
712 |
Total current assets |
|
14,995 |
12,307 |
Total assets |
|
21,363 |
18,057 |
Current liabilities |
|
|
|
Trade and other payables Derivative financial instruments |
|
1,633 3 |
750 10 |
Total current liabilities |
|
1,636 |
760 |
Non-current liabilities |
|
|
|
Bank loans |
|
8,400 |
6,878 |
Deferred income tax liabilities |
|
717 |
756 |
Total non-current liabilities |
|
9,117 |
7,634 |
Total liabilities |
|
10,753 |
8,394 |
Net assets |
|
10,610 |
9,663 |
Equity |
|
|
|
Share capital |
|
843 |
843 |
Share premium account |
|
- |
5,351 |
Capital redemption reserve |
|
- |
847 |
Share based payment reserve |
|
348 |
211 |
Investment revaluation reserve |
|
5 |
5 |
Retained earnings |
|
9,414 |
2,406 |
Total equity attributable to owners of the parent company |
|
10,610 |
9,663 |
These financial statements were approved by the Board of Directors and authorised for issue on 19 August 2014.
Signed on behalf of the Board of Directors
Raymond Lipman Colin Stone
Consolidated Statement of Changes in Equity
31 March 2014
|
|
|
||||||||||||||||||
|
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 2013 |
843 |
5,351 |
847 |
211 |
5 |
2,406 |
9,663 |
|
||||||||||||
Comprehensive income |
|
|
|
|
|
|
|
|
||||||||||||
Profit for the year |
- |
- |
- |
- |
- |
810 |
810 |
|
||||||||||||
Total comprehensive income |
- |
- |
- |
- |
- |
810 |
810 |
|
||||||||||||
Transactions with owners |
|
|
|
|
|
|
|
|||||||||||||
Capital reduction |
- |
(5,351) |
(847) |
- |
- |
6,198 |
- |
|
||||||||||||
Share based payment charge for the year |
- |
- |
- |
137 |
- |
- |
137 |
|||||||||||||
Balance at 31 March 2014 |
843 |
- |
- |
348 |
5 |
9,414 |
10,610 |
|||||||||||||
|
|
|
||||||||||||||||||
|
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 Cash Flows
Year ended 31 March 2014
Note |
2014 £'000 |
2013 £'000 |
|
|
|
|
|
Operating activities |
|
|
|
Cash (outflow)/generated from operations |
5 |
(787) |
648 |
Interest paid |
|
(416) |
(227) |
Net cash (outflow)/generated from operating activities |
|
(1,203) |
421 |
Investing activities |
|
|
|
Interest received |
|
1 |
2 |
Purchase of property, plant and equipment |
|
(115) |
(105) |
Distributions from associate |
|
30 |
70 |
Proceeds from sale of property, plant and equipment |
|
56 |
179 |
Net cash (outflow)/generated from investing activities |
|
(28) |
146 |
Financing activities |
|
|
|
New loans |
|
8,206 |
6,878 |
Loan repayments |
|
(6,684) |
(7,190) |
Net cash generated/(outflow) from financing activities |
|
1,522 |
(312) |
Net increase in cash and cash equivalents |
|
291 |
255 |
Cash and cash equivalents at beginning of year |
|
712 |
457 |
Cash and cash equivalents at end of year |
|
1,003 |
712 |
On 19 August 2014, 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 2014 or 31 March 2013.
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 statutory financial statements for the year ended 31 March 2014 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
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 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 2013, as described in those annual financial statements.
The calculation of the basic and diluted earnings per share is based on the following data:
|
|
2014 £'000 |
2013 £'000 |
Profit for the year attributable to equity holders of the company |
|
810 |
1,160 |
|
|
2014 '000 |
2013 '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 |
|
8,693 |
214 |
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
|
25,544 |
17,065 |
|
|
2014 £'000 |
2013 £'000 |
Fair value |
|
|
|
At 1 April 2013 |
|
5,018 |
4,793 |
Increase in fair value during the year |
|
325 |
225 |
At 31 March 2014 |
|
5,343 |
5,018 |
The fair value of the investment properties at 31 March 2014 comprises freehold properties of £4,765,000 (2013: £4,440,000) and long leasehold properties of £578,000 (2013: £578,000).
The leasehold and freehold investment property have been classified within level 3 of the fair value hierarchy (unobservable inputs).
The valuation of the Chandos Tennis club of £4,500,000 (2013: £4,175,000)
The Group has a conditional sales agreement to develop this site. The methodology to value this property is to calculate net present value of the future anticipated contract payments and deduct a percentage for planning risk and to provide for the potential affordable housing obligations which both remain outstanding at 31 March 2014.
31 March 2014 valuation
|
|
|
|
£'000 |
£'000 |
£'000 |
£4,500,000 |
|
|
|
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 |
31 March 2013 valuation
|
|
|
|
£'000 |
£'000 |
£'000 |
£4,175,000 |
|
|
|
Change in discount rate |
||
|
|
|
|
-0.5% |
0% |
0.5% |
|
|
Change in |
-5% |
4,847 |
4,772 |
4,698 |
|
|
risk rate |
0% |
4,254 |
4,175 |
4,400 |
|
|
|
5% |
3,661 |
3,596 |
3,532 |
The remaining 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 2014, 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 by £65,000 (2013: £65,000).
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 2013 or 2014.
The Group has pledged investment properties with a carrying value of £5,323,000 (2013: £4,998,000) to secure banking facilities granted to the Group.
The fair value of the Group's investment properties at 31 March 2014 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:
|
|
2014 £'000 |
2013 £'000 |
External independent valuations |
|
|
|
- Cushman & Wakefield |
|
- |
4,175 |
Directors' valuations |
|
5,343 |
843 |
|
|
5,343 |
5,018 |
4. TRADING PROPERTIES
|
2014 £'000 |
2013 £'000 |
|
|
|
Properties for resale |
12,483 |
9,864 |
|
|
|
The Group has pledged properties for resale with carrying value of £11,103,000 (2013: £7,268,000) to secure banking facilities granted to the Group.
Properties for resale were reviewed for impairment as at 31 March 2014, 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
|
|
2014 £'000 |
2013 £'000 |
Profit before tax |
|
903 |
1,028 |
Adjustments for: |
|
|
|
Depreciation of property, plant and equipment |
|
50 |
57 |
Gain on sale of property, plant and equipment |
|
(9) |
(10) |
Gains on revaluation of investment properties |
|
(325) |
(225) |
Finance cost |
|
409 |
278 |
Finance income |
|
(1) |
(2) |
Share based payment charge |
|
137 |
138 |
Share of results of jointly controlled entity |
|
(252) |
(446) |
Share of results of associate |
|
(53) |
(20) |
Changes in working capital: |
|
|
|
(Increase)/decrease in trading properties |
|
(2,619) |
363 |
Decrease/(increase) in trade and other receivables |
|
197 |
(584) |
Increase in trade and other payables |
|
776 |
71 |
Cash (outflow)/generated from operations |
|
(787) |
648 |