10 Dec 2014 07:00
SAFELAND PLC
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
Chairman's statement
I am delighted to report that the six months to 30 September 2014 has seen Safeland plc generate a significant increase in turnover and profit.
Headlines
Turnover: £7.76m (2013: £5.03m), up 54.1%
Profit before tax: £2.2m (2013: £0.2m)
Total shareholder return: 127.6% (2013: 68.0%)
Dividend in specie paid in the period equivalent to 10.73 pence per share (2013: nil)
Net asset value per share: 63.8p (2013: 59.0p, 31 March 2014 63.0p)
The six month period has seen the Board focus on realising the increase in value from some of the Group's investments and its portfolio of trading property whilst continuing to identify new opportunities in the London property market.
On 2 May 2014, Safeland demerged its Safestay joint venture. Safeland received 3,617,246 shares from Safestay plc, with a market value of £1.808m, generating a profit on sale of its investment in the joint venture for the half year of £209k. Combined with the capital restructuring approved by shareholders on 20 February 2014, Safeland made a distribution to shareholders by way of a dividend in specie of the Safestay plc shares it had received. The market value of the Safestay plc shares was the equivalent of a cash dividend of 10.73 pence per share.
On 4 November 2014, Safeland announced that it had completed the sale of 31 residential units in Wimbledon for £10.23m. Construction of these flats is due to be completed in two stages in February 2015 and June 2015.
On 7 November 2014, Safeland announced that following the granting of a planning consent, it had completed the sale of the Chandos Tennis club to a prominent housebuilder who intends develop the site. The consideration payable comprised £4.0 million in cash, which has been received. The balance will be satisfied by way of the transfer to Safeland of four detached houses (valued by the Company's directors in aggregate at £9.2 million) in the completed development anticipated by the summer of 2017. The cash consideration received was used to redeem bank debt secured on the property. The Group is also entitled to overage payments from the sale of the residential units once developed.
On 9 December 2014, the Board renewed its £12.5m credit facility with its principal bankers, Lloyds, for a further 3 years.
Outlook
The property market remains stable but could be affected by interest rate changes and global economic events. Notwithstanding this, the Board believes that it has the skills necessary, and the resources available, to make the opportunistic acquisitions and sales that generate shareholder return.
Raymond Lipman
Chairman
Contacts:
Larry Lipman, Managing Director, Safeland Plc: 020 8815 1600
Tom Griffiths, Westhouse Securities Limited: 020 7601 6100
Safeland Plc Condensed consolidated income statement | Unaudited Six months | Unaudited Six months | Audited Year |
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| ended | ended | ended |
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| 30 September | 30 September | 31 March |
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2014 | 2013 | 2014 |
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| £000 | £000 | £000 |
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Revenue | 7,763 | 5,029 | 10,408 |
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Cost of sales | (5,315) | (4,003) | (8,269) |
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Gross profit | 2,448 | 1,026 | 2,139 |
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Administrative expenses | (588) | (711) | (1,458) |
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Gain on revaluation of investment properties | 225 | - | 325 |
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Share of results of jointly controlled entity | 11 | 58 | 252 |
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Share of results of associate | 25 | 22 | 53 |
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Profit on sale of investment in joint venture | 209 | - | - |
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Profit on sale of investment property | 124 | - | - |
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Operating profit | 2,454 | 395 | 1,311 |
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Finance income | 1 | - | 1 |
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Finance costs | (224) | (180) | (409) |
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Profit before tax | 2,231 | 215 | 903 |
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Tax | (351) | - | (93) |
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Profit for the financial period attributable to owners of the parent company | 1,880 | 215 | 810 |
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Basic earnings per share (note 2) | 11.15p | 1.28p | 4.81p | |||
Diluted earnings per share (note 2) | 5.12p | 0.58p | 3.17p | |||
Safeland plc Condensed consolidated statement of comprehensive income | Unaudited Six months | Unaudited Six months | Audited Year |
| ended | ended | ended |
| 30 September | 30 September | 31 March |
| 2014 | 2013 | 2014 |
| £000 | £000 | £000 |
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Profit for the period | 1,880 | 215 | 810 |
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Total comprehensive income for the period attributable to owners of the parent company | 1,880 | 215 | 810 |
Condensed consolidated statement of financial position | Unaudited 30 September | Unaudited 30 September | Audited 31 March |
| 2014 | 2013 | 2014 |
| £000 | £000 | £000 |
Non-current assets |
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Property plant and equipment | 170 | 149 | 151 |
Investment properties (note 5) | 5,448 | 5,018 | 5,343 |
Investment in jointly controlled entity | - | 504 | 698 |
Investments in associate | 151 | 126 | 126 |
Available-for-sale investments | 225 | 50 | 50 |
| 5,994 | 5,847 | 6,368 |
Current assets |
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Trading properties (note 6) | 13,098 | 13,239 | 12,483 |
Trade and other receivables | 362 | 1,308 | 1,509 |
Cash and cash equivalents | 2,865 | 499 | 1003 |
| 16,325 | 15,046 | 14,995 |
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Total assets | 22,319 | 20,893 | 21,363 |
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Current liabilities |
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Bank loans and overdrafts (note 7) | 9,500 | - | - |
Trade and other payables | 1,287 | 488 | 1,633 |
Derivative financial instruments | 3 | 2 | 3 |
| 10,790 | 490 | 1,636 |
Non-current liabilities |
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Bank loans (note 7) | - | 9,700 | 8,400 |
Deferred income tax liabilities | 778 | 756 | 717 |
| 778 | 10,456 | 7,634 |
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Total liabilities | 11,568 | 10,946 | 10,753 |
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Net assets | 10,751 | 9,947 | 10,610 |
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Equity |
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Share capital | 843 | 843 | 843 |
Share premium account | - | 5,351 | - |
Capital redemption reserve | - | 847 | - |
Share-based payment reserve | 417 | 280 | 348 |
Investment revaluation reserve | 5 | 5 | 5 |
Retained earnings | 9,486 | 2,621 | 9,414 |
Total equity attributable to owners of the parent company | 10,751 | 9,947 | 10,610 |
Safeland plc Condensed consolidated statement of cash flows | Unaudited Six months | Unaudited Six months | Audited Year |
| Ended | ended | ended |
| 30 September | 30 September | 31 March |
| 2014 | 2013 | 2014 |
| £000 | £000 | £000 |
Cash flows from operating activities |
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Cash generated/(utilised) from operations (note 4) | 946 | (2,819) | (787) |
Interest paid | (225) | (189) | (416) |
Net cash generated/(utilised) from operating activities | 721 | (3,008) | (1,203) |
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Cash flows from investing activities |
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Cash flows from investing activities | 1 | - | 1 |
Distributions from associate | - | - | 30 |
Purchase of property, plant and equipment | (88) | (41) | (115) |
Purchase of available for sale investments | (175) |
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Proceeds from sale of investment property | 244 | - | - |
Proceeds from sale of property, plant and equipment | 59 | 14 | 56 |
Net cash inflow/(outflow) from investing activities | 41 | (27) | (28) |
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Cash flows from financing activities |
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New loans | 6,400 | 2,822 | 8,206 |
Loan repayments | (5,300) | - | (6,684) |
Net cash inflow from financing activities | 1,100 | 2,822 | 1,522 |
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Net increase/(decrease) in cash and cash equivalents | 1,862 | (213) | 291 |
Cash and cash equivalents at beginning of period | 1,003 | 712 | 712 |
Cash and cash equivalents at end of period | 2,865 | 499 | 1,003 |
Safeland plc | Share | Share | Capital | Share-based | Investment | Retained | Total |
Condensed consolidated statement of changes in | capital | premium | Redemption | payment | revaluation | earnings | equity |
Equity |
| account | Reserve | reserve | reserve |
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| £000 | £000 | £000 | £000 | £000 | £000 | £000 |
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Balance at 1 April 2014 | 843 | - | - | 348 | 5 | 9,414 | 10,610 |
Comprehensive income |
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Profit for the six months period to 30 September 2014 | - | - | - | - | - | 1,880 | 1,880 |
Total comprehensive income | - | - | - | - | - | 1,880 | 1,880 |
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Transactions with owners |
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Dividend | - | - | - | - | - | (1,808) | (1,808) |
Share-based payment charge for the period | - | - | - | 69 | - | - | 69 |
Balance at 30 September 2014 | 843 | - | - | 417 | 5 | 9,486 | 10,751 |
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1. Basis of preparation and accounting policies
The condensed interim consolidated financial statements of the Company and its subsidiaries ("the Group") for the six months ended 30 September 2014 ("the period") have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest audited financial statements for the year ended 31 March 2014. This half year statement does not constitute full accounts as defined by Section 434 of the Companies Act 2006
These condensed interim financial statements have not been audited, do not include all of the information required for full annual financial statements, and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 31 March 2014.
2. Earnings per share
| Unaudited Six months | Unaudited Six months | Audited Year |
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| ended | Ended | ended |
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| 30 September | 30 September | 31 March |
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2014 | 2013 | 2014 |
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| £000 | £000 | £000 | ||||
Profit for the financial period attributable to owners of the parent company | 1,880 | 215 | 810 |
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| No | No | No |
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| 000 | 000 | 000 |
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Weighted average number of ordinary shares for |
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the purposes of basic earnings per share | 16,851 | 16,851 | 16,851 |
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Effect of potential dilutive ordinary shares:
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share options | 19,865 | 19,865 | 8,693 |
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Weighted average number of ordinary shares for the purposes of diluted earnings per share | 36,716 | 17,789 | 25,544 |
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Diluted Earnings per share is calculated by adjusting the earnings and number of shares for the effects of dilutive options and other dilutive potential ordinary shares.
3. Dividends
On 2 May 2014, the company distributed the Safestay plc shares it received by way of a dividend in specie. Each shareholder received one Safestay plc share for every 4.66 Safeland plc share held. The market value of the Safestay plc shares at the date of the distribution was 50p.
No interim dividend has been declared.
4. Cash flows from operating activities
| Unaudited Six months | Unaudited Six months | Audited Year |
| Ended | ended | ended |
| 30 September | 30 September | 31 March |
| 2014 | 2013 | 2014 |
| £000 | £000 | £000 |
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Profit before tax | 2,230 | 215 | 903 |
Depreciation | 25 | 18 | 50 |
Loss on sale of property, plant and equipment | (15) | (7) | (9) |
Gain on revaluation of investment properties | (225) | - | (325) |
Profit on sale of investment in joint venture | (209) | - | - |
Profit on sale of investment property | (124) |
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Share of results of associate | (25) | (22) | (53) |
Share of results of jointly controlled entity | (11) | (58) | (252) |
Finance income | (1) | - | (1) |
Finance costs | 219 | 180 | 409 |
Share-based payments charge | 69 | 69 | 137 |
| 1,933 | 395 | (787) |
Changes in working capital |
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Increase in trading properties | (615) | (3,375) | (2,619) |
Decrease in trade and other receivables | 258 | 423 | 197 |
(Decrease)/increase in trade and other payables | (630) | (262) | 776 |
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| 946 | (2,819) | (787) |
5. Investment properties | |||||||
Unaudited Six months | Unaudited Six months | Audited Year |
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ended | ended | ended |
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30 September | 30 September | 31 March |
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2014 | 2013 | 2014 |
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£000 | £000 | £000 |
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Fair value |
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Start of the period | 5,343 | 5,018 | 5,018 |
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Disposals | (120) | - | - |
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Increase in fair value during the period | 225 | - - | 325 |
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End of period | 5,448 | 5,018 | 5,343 |
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The fair value of the investment properties at 30 September 2014 comprises freehold properties of £4,990,000 (30 September 2013: £4,440,000 and 31 March 2014: 4,765,000 and long leasehold properties of £458,000 (30 September 2013: £578,000 and 31 March 2014: £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 30 September 2014, 30 September 2013 or 31 March 2014.
The Group has pledged investment properties for resale with carrying value of £5,448,000 (30 September 2013: £5,018,000 and 31 March 2014: £5,343,000).
On the 7 November 2014, the Chandos Tennis Club was sold. At the 30 September 2014 the carrying value of this property was £4,725,000 (see note 8).
6. Trading properties
Unaudited Six months | Unaudited Six months | Audited Year | |||
ended | ended | ended | |||
30 September | 30 September | 31 March | |||
2014 | 2013 | 2014 | |||
£000 | £000 | £000 | |||
Properties for resale
| 13,098 | 13,239 | 12,483 | ||
The Group has pledged trading properties for resale with carrying value of £11,169,000 (30 September 2013: £13,239,000 and 31 March 2014: £12,483,000).
7. Bank loans and overdrafts | ||||||||
Unaudited Six months | Unaudited Six months | Audited Year |
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ended | ended | ended |
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30 September | 30 September | 31 March |
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2014 | 2013 | 2014 |
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£000 | £000 | £000 |
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Bank loans
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Due within one year | 9,500 | - | - |
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Due within one to two years | - | 9,700 | 8,400 |
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| 9,500 | 9700 | 8,400 |
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There were no breaches in bank loan covenants as at 30 September 2014, 30 September 2013 or 31 March 2014. All of the Group's bank loans and overdrafts disclosed above comprise borrowings in sterling. The bank loans are secured on properties owned by the Group.
At 30 September 2014, the loan facility was due to expire on 24 April 2015. On 9 December 2014 the company renewed its loan facility with its principal lender for a three year period ending 8 December 2017.
8. Post balance sheet events
The company announced on 7 November 2014 the sale of the Chandos tennis club to a prominent residential developer after planning consent to build residential property at this location was unconditionally granted.
The completion of the sale will be recognised in the second half of the current financial year. At 30 September 2014 the property was valued on the future anticipated proceeds less a deduction for planning risks which were prevalent at that date.
The Group received £4.0m in cash on the completion date and, in addition, a deferred consideration of four residential properties from the developer in exchange for the Tennis club and a second plot of land held in trading stock. This property is anticipated to be completed and transferred to the group in June 2017 where it will be classed as trading property. The Directors have valued this deferred consideration at £9.20m and estimate the net present value to be £7.65m after applying a discount rate of 6.5%. The carrying value of the investment property sold at 30 September 2014 was £4.725m and the trading property was £1.836m. The group is also entitled to overage payments from the onward sale of the residential property sold from this development, although the directors do not anticipate further proceeds at this stage.
9. Copies of this announcement are available on the Company's website www.safeland.co.uk.