Half-year Report

Safeland plc

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

Interim Results

For the Six Months to 30 September 2016

Safeland (AIM: SAF), the property trading and investment company, announces its unaudited interim results for the six months ended 30 September 2016.

Highlights

Turnover: £1.9m (2015: £12.5m)

Loss before tax: £0.4m (2015: profit £4.3m)

Net asset value per share: 111.7p (30 September 2015: 110.7p, 31 March 2016: 114.0p)

Managing Director's Statement

I am pleased to report the Company's interim results for the 6 months to 30 September 2016. These results reflect transactional volatility that shareholders will be aware of, combined with the extraordinary market conditions which we find ourselves in.

During the period, the Company sold the second of two properties located in Golders Green and obtained a planning consent for its Muswell Hill hotel property for conversion into 18 flats ranging from 1-3 bedrooms. The hotel ceased operation in August 2016 and construction has commenced on site, with completion anticipated to take place in the second half of 2017.

An announcement was made in December 2015 regarding the purchase of a substantial house in Hampstead Garden Suburb for redevelopment. This is nearing completion and contracts have been exchanged for its sale with completion anticipated in the second half of this financial year.

Given the results for the 6 months ended 30 September 2016, the Directors do not declare the payment of an interim dividend (2015: 1.5p). 

Outlook

As previously stated, the market is constrained by the current economic and political outlook, which is creating a very cautious environment. 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 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.

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 2016 (unaudited)

For the six months to 30 September 2015 (unaudited)

For the year ended 31 March 2016 (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 2016 ("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 2016. 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 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 to be undertaken on the site of the Chandos Tennis Club in the following three years 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 comprises revenues from overnight hotel accommodation, banqueting facility hire and sales of food and beverages. All revenues are recognised when the service is provided.

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.

Restatement of stock as investment property

Triangle Estates Limited (TEL) was acquired by the Group on 19 December 2014. It was trading as an investment company on acquisition and in the opinion of the directors has continued to do so.

At 31 September 2015, the carrying value of the Group's trading properties included an amount of £1,970k that should have been classified as investment properties. This has now been restated for that period ended 31 September 2015 in the comparative figures.

This is further set out in more detail in notes 5 and 6 to these abbreviated interim financial statements.

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 the six months ended 30 September 2015, the Company paid an interim dividend of 1.5p per ordinary share. There was no final dividend in the year to 31 March 2016.

4. Cash flows from operating activities

5. Investment properties

The fair value of the investment properties at 30 September 2016 comprises freehold properties of £665,000 (30 September 2015: £265,000 and 31 March 2016: £665,000) and long leasehold properties of £458,000 (30 September 2015: £458,000 and 31 March 2016: £458,000).

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 2016, 30 September 2015 or 31 March 2016.

The Group has pledged investment properties for resale with carrying value of £703,000 (30 September 2015: £703,000 and 31 March 2016: £703,000) to secure banking facilities granted to the Group.

6. Trading properties

The Group has pledged trading properties for resale with carrying value of £14,464,000 (30 September 2015: £9,406,000 and 31 March 2015: £14,838,000) to secure banking facilities granted to the Group.

7. Bank loans and overdrafts

There were no breaches in bank loan covenants as at 30 September 2016. 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.

8. Share capital