SAF.L Regulatory News (SAF)

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")

STRICTLY EMBARGOED UNTIL 7am: 27th November 2017

Safeland plc

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

Interim Results

For the Six Months to 30 September 2017

Safeland (AIM: SAF), the property trading and investment company, announces its unaudited interim results for the six months ended 30 September 2017

Highlights

Turnover: £2.8m (2016: £1.9m)

Loss before tax: £0.2m (2016: loss £0.4m)

Net asset value per share: 129.3p (30 September 2016: 111.7p, 31 March 2017: 129.0p)

Managing Director's Statement

I am pleased to report the Group's unaudited interim results for the 6 months to 30 September 2017. These results reflect transactional volatility that shareholders will be aware of.

During the period, the Group sold its residual interest in a property in London N2 and purchased and sold a mixed-use property in London NW9. The disposals generated total revenues of £2.8m. Work also continues in redeveloping the former hotel in Muswell Hill into 18 apartments and in constructing 3 detached properties near our head office in London N2; both are proceeding according to plan and we expect completion on both projects during the first half of 2018.

Given the results for the 6 months ended 30 September 2017, the Directors do not propose the payment of an interim dividend (6 months ended 30 September 2016: nil; year ended 31 March 2017: 1p). 

Outlook

As stated in previous announcements, the market continues to be constrained by the current economic and political outlook. However, we continue to pursue acquisition opportunities whilst continuing to add value to existing stock held through planning or development.

The Board is confident that it has the skills necessary to make selected acquisitions in the current market, but is being extremely selective until there is further clarity as to the general economic and political outlook.

For further information:

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

There is no difference between the diluted loss per share and the basic loss per share presented as the effect of the share options in issue is anti-dilutive.

Except as stated in the comparative numbers above in relation to discontinued activities relating to the closure of the former Raglan Hall Hotel, the revenue and operating result for the periods are derived from continuing operations in the United Kingdom.

Consolidated Statement of Changes in Equity

For the six months to 30 September 2017 (unaudited)

For the six months to 30 September 2016 (unaudited)

For the year ended 31 March 2017 (audited)

1. Basis of preparation and accounting policies

The condensed interim consolidated financial statements of the Company and its subsidiaries (the "Group") for the 6 months to 30 September 2017 (the "period") have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial information presented above does not constitute statutory financial statements as defined by section 435 of the Companies Act 2006.

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.

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 2017. While the financial figures included within this interim report have been computed in accordance with IFRS applicable to interim periods, this report does not contain sufficient information to constitute an interim financial report as set out in International Accounting Standard 34 Interim Financial Reporting.

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 a 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.

Revenue in the previous period arising from deferred consideration in the form of four completed houses in a residential development being completed on the site of the Chandos Tennis Club in the forthcoming year is based on a valuation by the directors, discounted to a present-day value using the weighted average cost of capital.

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

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

Freehold property

Freehold property is stated at cost less accumulated depreciation and is depreciated at 2% per annum on a straight-line basis, pro-rated in the year of acquisition.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and are depreciated over their estimated useful lives on the following annual bases:

Motor vehicles 25% (reducing balance)

Fixtures, fittings and equipment 20% (reducing balance)

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 period 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.

2. Earnings per share

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

No interim dividend has been declared in respect of the six months ended 30 September 2017. In the six months ended 30 September 2016, the Company did not pay an interim dividend. A final dividend in respect of the year to 31 March 2017 of 1p per ordinary share was paid on 29 September 2017.

4. Cash flows from operating activities

5. Investment properties

The fair value of the investment properties at 30 September 2017 comprises freehold properties of £457,000 (30 September 2016: £665,000 and 31 March 2017: £725,000) and long leasehold properties of £725,000 (30 September 2016: £458,000 and 31 March 2017: £457,000).

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 2017, 30 September 2016 or 31 March 2017.

The Group has pledged investment properties for resale with a total carrying value of £1,175,000 (30 September 2016: £703,000 and 31 March 2017: £1,182,000) to secure banking facilities granted to the Group.

6. Trading properties

The Group has pledged trading properties for resale with carrying value of £13,290,000 (30 September 2016: £14,464,000 and 31 March 2016: £9,113,000) to secure banking facilities granted to the Group.

7. Bank loans and overdrafts

There were no breaches in bank loan covenants at 30 September 2017. All of the Group's bank loans and overdrafts disclosed above comprise borrowings in sterling. The facility is based on LIBOR plus a fixed margin. A notional amount of £5,000,000 (2016: £5,000,000) has been capped at 3%.

The Group's £12,500,000 (2016: £12,500,000) revolving credit facility, which is secured on certain properties owned by it, is due to expire on 28 February 2018. The Group has entered into refinancing discussions with Lloyds Bank plc which has issued a signed Letter of Intent to renew the facility for a further five years under similar terms and conditions as exist currently.

8. Share capital

During the period, the Company bought back and cancelled a total of 380,000 shares (year to 31 March 2017: 193,000 shares), in six tranches, at a total cost of £216,000 (year to 31 March 2017: £108,000), reducing the nominal value of shares by £19,000 (year to 31 March 2017: £10,000), which is reflected in these accounts as a capital redemption reserve. No shares were bought back by the Company and cancelled in the six months to 30 September 2016. The Directors considered that the acquisition and cancellation of shares during the 6 months ended 30 September 2017 would enhance the value of each of the Company's remaining shares in issue.

Following the period end, on 9 October 2017, the Company announced that on 6 October 2017 it had purchased 30,000 ordinary shares of 5p each at a price of 56p per share for cancellation, reducing its issued share capital to 14,957,380 shares.