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Safeland PLC (SAF)

  Print      Mail a friend       Annual reports

Friday 11 August, 2017

Safeland PLC

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

 

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 

+44 (0) 20 8815 1600

Larry Lipman, Managing Director

 

 

 

Stockdale Securities (Nominated Adviser and Broker)

 

Tom Griffiths

+44 (0) 20 7601 6139

 

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%.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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