REG - Safestore Hldgs plc - Full Year Results <Origin Href="QuoteRef">SAFE.L</Origin> - Part 4

Safestore HoldingsAnnouncement

09/01/2017 07:05

- Part 4: For the preceding part double click  ID:nRSI5870Tc 

                             249.5     
 Finance lease liabilities                         -                                                   47.1                                            47.1      
 Derivative financial instruments                  1.4                                                 -                                               1.4       
 Payables and accruals                             -                                                   25.5                                            25.5      
 As at 31 October 2015                             1.4                                                 322.1                                           323.5     
 
 
The interest rate risk profile, after taking account of derivative financial instruments, was as follows: 
 
             2016                             2015      
             Floating rate£'m  Fixed rate£'m  Total£'m    Floating rate£'m  Fixed rate£'m  Total£'m  
 Borrowings  96.0              219.7          315.7       64.9              184.6          249.5     
 
 
The weighted average interest rate of the fixed rate financial borrowing was 3.91% (FY2015: 4.11%) and the weighted average
remaining period for which the rate is fixed was four years for bank borrowings and three/eight years for the notes
(FY2015: five years for bank borrowings; four/nine years for notes). 
 
Maturity analysis 
 
The table below analyses the Group's financial liabilities and non-settled derivative financial instruments into relevant
maturity groupings based on the remaining period at the balance sheet date to the contractual maturity dates. The amounts
disclosed in the table are the contractual undiscounted cash flows. 
 
                                                          Less thanone year£'m  One to twoyears£'m  Two to fiveyears£'m  More thanfive years£'m  
 2016                                                                                                                                            
 Borrowings                                               9.7                   9.7                 296.7                46.1                    
 Derivative financial instruments                         5.6                   5.6                 10.5                 6.0                     
 Contractual interest payments and finance lease charges  9.8                   9.4                 23.5                 51.3                    
 Payables and accruals                                    28.3                  -                   -                    -                       
                                                          53.4                  24.7                330.7                103.4                   
 2015                                                                                                                                            
 Borrowings                                               8.2                   8.2                 242.4                38.4                    
 Derivative financial instruments                         5.3                   5.3                 13.3                 8.0                     
 Contractual interest payments and finance lease charges  7.6                   7.3                 18.7                 41.6                    
 Payables and accruals                                    25.5                  -                   -                    -                       
                                                          46.6                  20.8                274.4                88.0                    
 
 
12. Obligations under finance leases 
 
The Group leases certain of its investment properties under finance leases. The average remaining lease term is 11.5 years
(FY2015: 11.1 years). 
 
                                                 Minimum lease payments           Present value of minimumlease payments  
                                                 2016£'m                 2015£'m                                          2016£'m  2015£'m  
 Within one year                                 9.8                     7.6                                              9.4      7.2      
 Within two to five years                        32.9                    26.0                                             26.2     20.8     
 Greater than five years                         51.3                    41.6                                             23.3     19.1     
                                                 94.0                    75.2                                             58.9     47.1     
 Less: future finance charges on finance leases  (35.1)                  (28.1)                                           -        -        
 Present value of finance lease obligations      58.9                    47.1                                             58.9     47.1     
 
 
              2016£'m  2015£'m  
 Current      9.4      7.2      
 Non-current  49.5     39.9     
              58.9     47.1     
 
 
13. Called up share capital 
 
                                                                    2016£'m  2015£'m  
 Called up, allotted and fully paid                                                   
 208,689,628 (FY2015: 207,683,636) ordinary shares of 1 pence each  2.1      2.1      
 
 
14. Cash flow from operating activities 
 
Reconciliation of operating profit to net cash inflow from operating activities: 
 
 Cash generated from continuing operations           Notes  2016£'m  2015£'m  
 Profit before income tax                                   94.9     118.2    
 Gain on investment properties                       8      (41.7)   (78.9)   
 Negative goodwill on acquisition of subsidiary             (5.6)    -        
 Depreciation                                               0.4      0.4      
 Change in fair value of derivatives                        -        0.3      
 Net finance expense                                 3      14.4     16.0     
 Employee share options                                     1.2      1.0      
 Changes in working capital:                                                  
 (Increase)/decrease in trade and other receivables         (0.3)    0.2      
 (Decrease)/increase in trade and other payables            (1.4)    0.6      
 Cash generated from continuing operations                  61.9     57.8     
 
 
15. Analysis of movement in net debt 
 
                                          2015£'m  Cash flows£'m  Non-cashmovements£'m  2016£'m  
 Cash in hand                             13.8     (10.0)         1.6                   5.4      
                                                                                                 
 Debt due after one year                  (249.5)  (38.2)         (28.0)                (315.7)  
 Total net debt excluding finance leases  (249.5)  (38.2)         (28.0)                (315.7)  
 Finance leases due within one year       (7.2)    4.6            (6.8)                 (9.4)    
 Finance leases due after one year        (39.9)   -              (9.6)                 (49.5)   
 Total finance leases                     (47.1)   4.6            (16.4)                (58.9)   
 Total net debt                           (282.8)  (43.6)         (42.8)                (369.2)  
 
 
Non-cash movements relate to reclassification of non-current debt to current debt, amortisation of debt issue costs,
foreign exchange movements and unwinding of discount. 
 
16. Contingent liabilities 
 
As part of the Group banking facility, the Company has guaranteed the borrowings totalling £317.5 million (FY2015: £251.3
million) of fellow Group undertakings by way of a charge over all of its property and assets. There are similar cross
guarantees provided by the Group companies in respect of any bank borrowings which the Company may draw under a Group
facility agreement. The financial liability associated with this guarantee is considered remote and therefore no provision
has been recorded. 
 
Following a tax audit carried out on the Group's operations in France, elements of tax were challenged by the French Tax
Administration ("FTA") for financial years 2011 to 2013. Similar challenges from the FTA have also been made to other
operators within the self-storage industry. The Company and its legal advisers are of the opinion that there are no valid
grounds for these challenges and intend to strongly contest the findings of the FTA. The duration and outcome of this
dispute cannot be anticipated at this stage of the proceedings. Based on our analysis of the relevant information, any
potential exposure in relation to the tax audit issues is not likely to be material, and no provision for any potential
exposure has been recorded in the consolidated financial statements. 
 
17. Capital commitments 
 
The Group had £1.7 million of capital commitments as at 31 October 2016 (FY2015: £4.6 million). 
 
18. Related party transactions 
 
The Group's shares are widely held. 
 
During the year £nil (FY2015: £nil) transactions were carried out with related parties. 
 
19. Business combination 
 
On 29 July 2016, the Group completed the acquisition of Space Maker Stores Limited ("SMS") from Allodial Capital Limited
and James Elton for initial consideration of £40.9m plus £1.4m of deferred consideration, which has subsequently been paid,
resulting in a total consideration of £42.3 million. The consideration paid was less than the fair value of the
identifiable net assets and, as a result, £5.6 million of negative goodwill has been recognised within operating profit in
the consolidated income statement. In addition, £1.3 million of transaction related costs are included within
administrative expenses. The net gain arising on business combinations of £4.3 million, recognised in the income statement,
is considered to be exceptional. 
 
The fair value of the assets and liabilities of SMS recognised at the date of acquisition is set out in the table below: 
 
                                                                           £'m     
 Assets                                                                            
 Investment properties                                                     48.0    
 Interests in leasehold properties                                         10.3    
 Trade and other receivables                                               2.1     
 Cash                                                                      0.5     
 Total assets                                                              60.9    
 Liabilities                                                                       
 Trade and other payables                                                  (2.7)   
 Obligations under finance leases                                          (10.3)  
 Total liabilities                                                         (13.0)  
 Net assets                                                                47.9    
                                                                                   
 Fair value of consideration paid                                          42.3    
 Negative goodwill on acquisition of subsidiary                            5.6     
 Transaction related costs                                                 (1.3)   
 Net gain on business combinations recognised in the income statement      4.3     
 
 
Since the date of acquisition, SMS has contributed £2.4 million to the revenue of the Group and £1.1 million to the profit
after tax for the Group. On a pro forma basis, had the acquisition of SMS occurred at the beginning of the financial year,
it would have contributed revenue of £9.0 million and profit after tax of £4.0 million to the Group. 
 
This information is provided by RNS
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