REG - Safestore Hldgs plc - Interim Results <Origin Href="QuoteRef">SAFE.L</Origin> - Part 2
16/07/2015 11:29
- Part 2: For the preceding part double click ID:nRSR4948Qa
Employee remuneration (0.7)
Enquiry generation (0.5)
Other (including foreign exchange) (0.1)
Underlying administrative expenses for H1 2015 (7.7)
In order to arrive at underlying administrative expenses adjustments are made to remove the impact of exceptional items and
changes in the fair value of derivatives.
Exceptional items in the prior period, costs principally associated with the restructuring of the Group's senior management
team, were not repeated in the current period.
Underlying administrative expenses increased by £1.3m to £7.7m (H1 2014: £6.4m). The increase of £1.3m arose primarily in
the UK, and is due to investment in customer enquiry generation (£0.5m) and higher employee incentives (£0.7m), reflecting
the strong revenue and profit performance of the business during the period.
Investment Properties
The directors made the decision in 2014 that a full external valuation of the store portfolio shall be undertaken on an
annual rather than a bi-annual basis. Therefore, a sample of the Group's largest properties, representing approximately 45%
of the value of the Group's investment property portfolio at 31 October 2014, have been valued by the Group's external
valuers, Cushman & Wakefield LLP ("C&W"), as at 30 April 2015. In addition, at the same date, the directors have prepared
estimates of fair values for the remaining 55% of the Group's investment property portfolio, updating 31 October 2014
valuations to incorporate latest assumptions for estimated absorption, revenue growth and capitalisation rates to reflect
current market conditions and trading.
As a result of this exercise, the net gain or loss on investment properties during the period is as follows.
H1 2015 H1 2014
£'m £'m
Revaluation of investment properties 45.4 (4.4)
Revaluation of investment properties under construction 0.6 -
Depreciation on leasehold properties (2.1) (2.4)
Net gain/(loss) on investment properties 43.9 (6.8)
The movement on investment properties reflects the increased value of the Group's store portfolio as a result of the
continuing trading performance improvement. The UK business contributed £44.2m of the £46.0m gain, with £1.8m arising in
France.
Operating profit
Operating profit increased by £52.5m from £17.8m in H1 2014 to £70.3m in H1 2015. The movement principally reflects the
swing in the movement on investment properties from a loss of £6.8m to a gain of £43.9m, as well as a £1.8m improvement in
underlying EBITDA.
Net finance costs
Net finance costs consist of interest payable, interest on obligations under finance leases, fair value movements on
derivatives and exchange gains or losses.
H1 2015 H1 2014
£'m £'m
Net bank interest payable (5.8) (7.5)
Interest on obligations under finance leases (1.9) (2.2)
Fair value movement on derivatives 2.5 0.7
Net exchange losses (3.0) -
Unwinding of discount on CGS receivable 0.1 0.2
Exceptional finance expenses - (2.1)
Net finance costs (8.1) (10.9)
Bank interest payable continues to benefit from the lower blended interest rate and reduced borrowings following the
capital restructuring undertaken by the Group in H1 2014, as well the benefit of the repayment of E4.0m of borrowings in
France out of free cash flow.
Following the cessation of hedge accounting, net finance costs reflects £3.0m of exchange losses arising on the Group's US
dollar denominated borrowings, which would previously have been reflected in the hedge reserve. This is largely offset by
the net fair value gain on derivatives of £2.5m which includes a £3.1m gain in respect of cross currency swaps taken out by
the Group to hedge against movements in the US dollar denominated borrowings.
Exceptional finance costs of £2.1m, incurred during the prior period in the rebalancing of the Group's capital structure in
January 2014, have not been repeated in the current period.
Based on the drawn debt position as at 30 April 2015, the effective interest rate is analysed as follows:
Facility Drawn Hedged Hedged Bank Hedged Floating Total
£/E/$'m £'m £'m % Margin Rate Rate Rate
UK Term Loan £156.0 £156.0 £80.0 51% 2.25% 1.64% 0.50% 3.34%
UK Revolver £50.0 - - - 2.25% - 0.50% 2.75%
UK Revolver- non-utilisation £50.0 - - - 1.01% - - 1.01%
Euro Revolver E70.0 £32.3 £32.3 100% 2.25% 0.81% 0.05% 3.06%
Euro Revolver- non-utilisation E25.0 - - - 1.01% - - 1.01%
US Private Placement 2019 $65.6 £42.6 £42.6 100% 5.52% - - 5.83%
US Private Placement 2024 $47.3 £30.8 £30.8 100% 6.29% - - 6.74%
Unamortised finance costs (US PP) - (£0.5) - - - - - -
Total £329.6 £261.2 £185.7 71% 4.38%
The UK term loan of £156m is fully drawn as at 30 April 2015 and attracts a bank margin of 2.25%. The Group has interest
rate hedge agreements in place to June 2018 swapping LIBOR on £80.0m at an effective rate of 1.64%.
The £50m UK revolver facility had remained undrawn throughout the period. The Group pays a non-utilisation fee of 1.0125%
on undrawn balances.
The Euro revolver of E70m has E45m (£32.3m) drawn as at 30 April 2015 and attracts a bank margin of 2.25%. The Group has
interest rate hedges in place to June 2018 swapping EURIBOR on E45m at an effective rate of 0.8085%. During the period,
E4.0m of the revolver was repaid.
The US Private Placement Notes are fully hedged at 5.83% for the 2019 notes and 6.74% for the 2024 notes.
The hedge arrangements provide cover for 71% of the Group's drawn debt. Net interest payable includes a net fair value gain
on derivatives of £2.5m (H1 2014: gain of £0.7m).
Overall, the Group had an effective interest rate on its outstanding borrowings of 4.38% at 30 April 2015.
Interest on finance leases was £1.9m (H1 2014: £2.2m) and reflects part of the leasehold rental payment. The balance of the
leasehold payment is charged through the gain or loss on investment properties line and contingent rent in the income
statement. Overall, the leasehold rent charge is down from £5.0m in H1 2014 to £4.5m in H1 2015 reflecting the closure of
the St Denis Landy store and the purchase of the freeholds of two previous leasehold properties (in High Wycombe and St
Denis) since April 2014.
Tax
The tax charge for the period is analysed below:
Tax charge H1 2015 H1 2014
£'m £'m
Underlying current tax (0.6) (0.5)
Current tax (0.6) (0.5)
Underlying deferred tax (1.3) (1.4)
Tax on investment properties movement (0.6) 0.6
Tax on exceptional finance costs - 0.2
Tax on revaluation of interest rate swaps - 0.1
Other 0.1 (1.1)
Deferred tax (1.8) (1.6)
Tax charge (2.4) (2.1)
The income tax charge in the period is £2.4m (H1 2014: £2.1m).
In the UK the Group is a REIT, so the current tax charge all relates to the Paris business and amounted to £0.6m (H1 2014:
£0.5m). Underlying deferred tax related to the Paris business and amounted to a charge of £1.3m (H1 2014: £1.4m).
Profit after tax
The profit after tax for the period was £59.8m as compared with £4.8m in H1 2014. Basic EPS was 28.8 pence (H1 2014: 2.4
pence) and diluted EPS was 28.6 pence (H1 2014: 2.4 pence). Management considers cash tax adjusted EPS to be more
representative of the underlying EPS performance of the business and this is discussed above.
Dividends
The Board has announced an interim dividend of 3.0 pence per share, an increase of 40% on the interim dividend paid last
year of 2.15 pence. This will amount to £6.2m (H1 2014: £4.4m). The dividend will be paid on 14 August 2015 to shareholders
who are on the Company's register at the close of business on 10 July 2015. The ex-dividend date will be 9 July 2015. The
Property Income Dividend ("PID") element of the dividend payable for the period is 3.0 pence per share (H1 2014: 2.15
pence).
Property Valuation
As discussed above, a sample of the Group's largest properties, representing approximately 45% of the value of the Group's
investment property, have been valued by the Group's external valuers and the directors have prepared estimates of fair
values for the remaining 55% of the Group's investment property portfolio.
UK France Total France
£'m £'m £'m E'm
Value as at 1 November 2014 527.0 177.0 704.0 224.5
Currency translation movement - (16.0) (16.0) -
Additions 1.5 0.9 2.4 1.3
Purchase of freehold 1.8 - 1.8 -
Revaluation 43.6 1.8 45.4 2.4
Value at 30 April 2015 573.9 163.7 737.6 228.2
The table above summarises the movement in the valuations.
The exchange rate at 30 April 2015 was E1.395:£1 compared to E1.269:£1 at 31 October 2014. This movement in the foreign
exchange rate has resulted in a £16.0m adverse currency translation movement in the period. This will impact net asset
value ("NAV") but has no impact on the loan to value ("LTV") covenant as the assets in Paris are tested in Euro.
The Company's pipeline of expansion stores has been valued at £5.9m as at 30 April 2015, following a £0.6m valuation gain
during the period.
The property portfolio valuation has increased by £33.6m from the valuation of £704.0m at 31 October 2014. This reflects
the gain on valuation £45.4m plus capital additions of £4.2m, including the purchase of the High Wycombe freehold for
£1.8m, less the £16.0m exchange loss described above.
The adjusted EPRA NAV per share is 233.9 pence, an increase of 7.3% since 31 October 2014, mainly due to the revaluation
gains reported for the period.
Gearing and Capital Structure
The Group's borrowings comprise bank borrowing facilities, made up of a UK term loan and revolving facilities in the UK and
France, as well as a US Private Placement.
Net debt (including finance leases and cash) stood at £297.2m at 30 April 2015, a reduction of £3.1m during the period from
£300.3m at 31 October 2014. Total capital (net debt plus equity) increased from £708.3m at 31 October 2014 to £745.2m at 30
April 2015. The net impact is that the gearing ratio has reduced from 42% to 40% in the period.
Management also measures gearing with reference to its loan to value ("LTV") ratio defined as gross debt (excluding finance
leases) as a proportion of the valuation of investment properties and investment properties under construction (excluding
finance leases). At 30 April 2015 the Group LTV ratio was 35% compared with 37% at 31 October 2014.
The Group's £156m UK term loan facility and £50m UK revolver both run to June 2018 and currently attract a margin of 2.25%.
The UK revolver has remained undrawn throughout the period. Repayments of £5m will be made on the UK term facility every
six months commencing on 31 October 2015, with the balance due on expiry in June 2018.
The Group's Euro revolver is E70m, of which E45m had been drawn as at 30 April 2015, following the repayment of E4m out of
free cash flow during the period. It also runs to June 2018 and currently attracts a margin of 2.25%.
There is no amortisation on the US Private Placement debt of $113m. $66m was issued at 5.52% (swapped to 5.83%) with 2019
maturity and $47m was issued at 6.29% (swapped to 6.74%) with 2024 maturity.
The UK bank facilities and the US Private Placement share interest cover and LTV covenants. The interest cover requirement
is currently set at a level of EBITDA:interest of 2.0:1. In July 2015 this will increase to 2.2:1 and in July 2016 the
covenant ratchets to 2.4:1 where it remains until the end of the facilities. The UK LTV covenant reduced from 62.5% to
60.0% in April 2015, where it will remain until the end of the facilities, and the French LTV covenant remains at 60%
throughout the life of the facility. The Group is in compliance with its covenants at 30 April 2015 and, based on forecast
projections, is expected to be in compliance for a period in excess of twelve months from the date of this report.
Cash flow
The table below sets out the cash flow of the business in H1 2015 and H1 2014.
H1 2015 H1 2014
£'m £'m
Underlying EBITDA 26.9 25.1
Working capital/exceptionals/other 0.2 (2.7)
Operating cash inflow 27.1 22.4
Interest payments (6.7) (9.1)
Leasehold rent payments (4.5) (5.0)
Tax Payments (0.2) (1.1)
Free cash flow (before investing and financing activities) 15.7 7.2
Capital expenditure - investment properties (2.5) (1.6)
Capital expenditure - purchase of freehold (1.8) -
Capital expenditure - property, plant and equipment (0.1) (0.1)
Proceeds from disposal - investment properties - 40.5
Net inflow after investing activities 11.3 46.0
Dividends paid (10.3) (6.9)
Issue of share capital - 31.6
Net repayment of borrowings (3.0) (72.8)
Debt issuance costs - (2.1)
Hedge breakage costs - (4.9)
Net decrease in cash (2.0) (9.1)
Operating cash flow increased by £4.7m in the period, principally reflecting the £1.8m increase in underlying EBITDA and
£2.2m improvements in the cash flows from working capital.
Free cash flow (before investing and financing activities) grew by 118% to £15.7m (H1 2014: £7.2m) reflecting the reduction
in interest costs and leasehold rent payments arising from the refinancing and the closure of our St Denis Landy store in
the prior period.
Net investing activities included the purchase of the High Wycombe freehold for £1.8m, whereas the comparative period
benefitted from the receipt of the sale proceeds of the Whitechapel property.
Dividends paid to shareholders increased from £6.9m in H1 2014 to £10.3m in H1 2015, and the Group repaid £3.0m of
borrowings in France.
Consolidated income statement
for the six months ended 30 April 2015
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2015 2014 2014
(unaudited) (unaudited) (audited)
Note £m £m £m
Revenue 4 50.4 46.9 97.9
Cost of sales (16.5) (16.0) (32.3)
Gross profit 33.9 30.9 65.6
Administrative expenses (7.5) (6.3) (14.1)
Underlying EBITDA (operating profit before exceptional items, change in fair value of derivatives, gain/loss on investment properties, contingent rent and depreciation) 4 26.9 25.1 53.0
Exceptional items 5 - (0.6) (1.0)
Change in fair value of derivatives 0.2 0.7 1.2
Depreciation and contingent rent (0.7) (0.6) (1.7)
Operating profit before gain/(loss) on investment properties 26.4 24.6 51.5
Gain/(loss) on investment properties 11 43.9 (6.8) 24.1
Operating profit 70.3 17.8 75.6
Finance income 6 3.2 0.9 4.7
Finance expense 6 (11.3) (11.8) (27.9)
Profit before income tax 4 62.2 6.9 52.4
Income tax charge 7 (2.4) (2.1) (5.6)
Profit for the period 59.8 4.8 46.8
Earnings per share for profit attributable to the equity holders
- basic (pence) 10 28.8 2.4 23.2
- diluted (pence) 10 28.6 2.4 23.0
All items in the income statement relate to continuing operations.
An interim dividend of 3.00 pence per ordinary share has been declared for the period ended 30 April 2015 (30 April 2014:
2.15 pence).
Consolidated statement of comprehensive income
for the six months ended 30 April 2015
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2015 2014 2014
(unaudited) (unaudited) (audited)
£m £m £m
Profit for the period 59.8 4.8 46.8
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss
Cash flow hedges - (3.3) (3.3)
Recycling of hedge reserve - 3.2 6.7
Currency translation differences (9.3) (4.1) (8.4)
Total other comprehensive income, net of tax (9.3) (4.2) (5.0)
Total comprehensive income for the period 50.5 0.6 41.8
Consolidated balance sheet
as at 30 April 2015
30 April 30 April 31 October
2015 2014 2014
(unaudited) (unaudited) (audited)
Note £m £m £m
Non-current assets
Investment properties 11 737.6 674.3 704.0
Interests in leasehold properties 11 49.1 52.8 51.0
Investment properties under construction 11 5.9 5.6 5.3
Property, plant and equipment 1.5 1.7 1.5
Derivative financial instruments 15 0.8 0.1 -
Deferred tax assets 8 0.9 2.7 2.0
Other receivables 4.9 6.4 4.8
800.7 743.6 768.6
Current assets
Inventories 0.2 0.2 0.2
Trade and other receivables 22.3 21.8 20.2
Current income tax assets - - 0.2
Derivative financial instruments 15 0.5 - 0.3
Cash and cash equivalents 13.1 6.6 15.3
36.1 28.6 36.2
Total assets 836.8 772.2 804.8
Current liabilities
Financial liabilities
- Borrowings 14 (10.0) - (5.0)
- Derivative financial instruments 15 - (0.1) -
Trade and other payables (38.3) (36.8) (36.7)
Current income tax liabilities (0.2) (0.1) -
Obligations under finance leases (7.5) (8.4) (8.0)
(56.0) (45.4) (49.7)
Non-current liabilities
Bank borrowings 14 (251.2) (265.3) (259.6)
Derivative financial instruments 15 (3.0) (8.0) (4.8)
Deferred tax liabilities 8 (37.0) (38.7) (39.7)
Obligations under finance leases (41.6) (44.4) (43.0)
(332.8) (356.4) (347.1)
Total liabilities (388.8) (401.8) (396.8)
Net assets 448.0 370.4 408.0
Shareholders' equity
Ordinary shares 16 2.1 2.1 2.1
Share premium 60.0 59.8 60.0
Other reserves (12.2) (2.1) (2.9)
Retained earnings 398.1 310.6 348.8
Total equity 448.0 370.4 408.0
The notes set out below form an integral part of this condensed consolidated interim financial information.
Condensed consolidated statement of changes in equity
for the six months ended 30 April 2015
Sharecapital Sharepremium Translationreserve Hedgereserve Retainedearnings Totalequity
£m £m £m £m £m £m
At 1 November 2014 2.1 60.0 (2.9) - 348.8 408.0
Total comprehensive income for the period - - (9.3) 59.8 50.5
Transactions with owners in their capacity as owner:
Dividends (note 9) - - - - (11.0) (11.0)
Employee share options - - - - 0.5 0.5
At 30 April 2015 2.1 60.0 (12.2) - 398.1 448.0
Condensed consolidated statement of changes in equity
for the six months ended 30 April 2014
Sharecapital Sharepremium Translationreserve Hedgereserve Retainedearnings Totalequity
£m £m £m £m £m £m
At 1 November 2013 1.9 28.4 5.5 (3.4) 313.5 345.9
Total comprehensive income for the period - - (4.1) (0.1) 4.8 0.6
Transactions with owners in their capacity as owner:
Issue of share capital 0.2 31.4 - - - 31.6
Dividends (note 9) - - - - (8.1) (8.1)
Employee share options - - - - 0.4 0.4
At 30 April 2014 2.1 59.8 1.4 (3.5) 310.6 370.4
Condensed consolidated statement of changes in equity
for the year ended 31 October 2014
Sharecapital Sharepremium Translationreserve Hedgereserve Retainedearnings Totalequity
£m £m £m £m £m £m
At 1 November 2013 1.9 28.4 5.5 (3.4) 313.5 345.9
Total comprehensive income for the year - - (8.4) 3.4 46.8 41.8
Transactions with owners in their capacity as owner:
Dividends (note 9) - - - - (12.5) (12.5)
Increase in share capital 0.2 31.6 - - - 31.8
Employee share options - - - - 1.0 1.0
At 31 October 2014 2.1 60.0 (2.9) - 348.8 408.0
Consolidated cash flow statement
for the six months ended 30 April 2015
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2015 2014 2014
(unaudited) (unaudited) (audited)
£m £m £m
Profit before income tax 62.2 6.9 52.4
(Gain)/loss on the revaluation of investment properties (43.9) 6.8 (24.1)
Depreciation 0.2 0.2 0.5
Change in fair value of derivatives (0.2) (0.7) (1.2)
Finance income (3.2) (0.9) (4.7)
Finance expense 11.3 11.8 27.9
Employee share options 0.5 0.4 1.0
Increase in inventories - - (0.1)
Increase in trade and other receivables (2.6) (4.7) (3.5)
Increase in trade and other payables 2.3 2.2 4.4
Cash inflows from operating activities 26.6 22.0 52.6
Interest paid (8.6) (11.3) (19.4)
Interest received - - 0.1
Tax paid (0.2) (1.1) (1.9)
Net cash inflows from operating activities 17.8 9.6 31.4
Investing activities
Expenditure on investment and development properties (4.3) (1.6) (6.2)
Proceeds in respect of Capital Goods Scheme - - 1.8
Purchase of property, plant and equipment (0.1) (0.2) (0.3)
Proceeds from disposal of investment properties - 40.5 41.6
Proceeds from sale of property, plant and equipment - 0.1 0.1
Net cash (outflows)/inflows from investing activities (4.4) 38.8 37.0
Financing activities
Issue of share capital - 31.6 31.8
Equity dividends paid (10.3) (6.9) (12.5)
Proceeds from borrowings - 4.0 6.8
Debt issuance costs - (2.1) (2.1)
Hedge breakage payments - (4.9) (4.9)
Finance lease principal payments (2.1) (2.4) (4.9)
Repayment of borrowings (3.0) (76.8) (82.1)
Net cash outflows from financing activities (15.4) (57.5) (67.9)
Net (decrease)/increase in cash and cash equivalents (2.0) (9.1) 0.5
Exchange loss on cash and cash equivalents (0.2) (0.1) (1.0)
Opening cash and cash equivalents 15.3 15.8 15.8
Closing cash and cash equivalents 13.1 6.6 15.3
Reconciliation of net cash flow to movement in net debt
for the six months ended 30 April 2015
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2015 2014 2014
(unaudited) (unaudited) (audited)
£m £m £m
Net decrease in cash and cash equivalents (after exchange adjustments) (2.2) (9.2) (0.5)
Decrease in debt financing 5.3 80.5 83.0
Decrease in net debt 3.1 71.3 82.5
Net debt at start of period (300.3) (382.8) (382.8)
Net debt at end of period (297.2) (311.5) (300.3)
Notes to the interim report for the six months ended 30 April 2015
1 General information
The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is
Brittanic House, Stirling Way, Borehamwood, WD6 2BT.
The Company has its primary listing on the London Stock Exchange.
This interim report was approved for issue on 17 June 2015.
This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of
section 434 of the Companies Act 2006. The full accounts of Safestore Holdings plc for the year ended 31 October 2014,
which received an unqualified report from the auditors, and did not contain a statement under S.498(2) or (3) of the
Companies Act 2006, were filed with the Registrar of Companies on 8 April 2015.
This condensed consolidated interim financial information for 30 April 2015 and 30 April 2014 is unaudited. The interim
financial information for 30 April 2015 has been reviewed by the auditors and their Independent Review report is included
within this financial information.
2 Basis of preparation
The condensed consolidated interim financial information for the six months ended 30 April 2015 hasbeen prepared in
accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services
Authority) and with International Accounting Standard 34 'Interim Financial Reporting' (IAS 34) as adopted by the European
Union.
The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis
in preparing this condensed consolidated interim financial information.
The condensed consolidated interim financial information should be read in conjunction with the annual financial statements
for the year ended 31 October 2014, which have been prepared in accordance with IFRS as adopted by the European Union.
3 Accounting policies
The condensed consolidated interim financial information has been prepared on the basis of the accounting policies expected
to apply for the financial year to 31 October 2015 applicable to companies under IFRS. The IFRS and IFRIC interpretations
as adopted by the European Union that will be applicable at 31 October 2015, including those that will be applicable on an
optional basis, are not known with certainty at the time of preparing these interim financial statements. Thus the
accounting policies adopted in these interim financial statements may be subject to revision to reflect further IFRS, IFRIC
interpretations and pronouncements issued between 17 June 2015 and publication of the annual IFRS financial statements for
the year ending 31 October 2015.
The accounting policies and presentation applied are consistent with those in the annual financial statements for the year
ended 31 October 2014, as described in those financial statements. The following new and revised accounting standards and
IFRIC interpretations are applicable for the first time in the year ended 31 October 2015:
· IFRS 10 Consolidated Financial Statements;
· IFRS 11 Joint Arrangements;
· IFRS 12 Disclosures of Interests in Other Entities;
· IAS 19 Employee Benefits - Amendments relating to employee contributions to defined benefit plans;
· IAS 27 Separate Financial Statements;
· IAS 28 Investments in Associates and Joint Ventures;
· IAS 32 Financial Instruments: Presentation - Amendments relating to the offsetting of Financial Assets and Financial Liabilities;
· IAS 36 Impairment of Assets - Amendments arising from Recoverable Amount Disclosure for Non-Financial Assets;
· IAS 39 Financial Instruments: Recognition and Measurement - Amendments relating to Novation of Derivatives and Continuation of Hedge Accounting;
· IFRIC 21 Levies;
· Annual Improvements to IFRSs 2010-2012 Cycle; and
· Annual Improvements to IFRSs 2011-2013 Cycle.
There has been no significant impact from the adoption of these accounting standards and IFRIC interpretations.
The financial statements have been prepared under the historical cost convention as modified by the revaluation of
investment properties and fair value of derivative financial instruments.
The preparation of financial statements in conformity with generally accepted accounting principles requires the use of
certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the
Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions
and estimates are significant to the condensed consolidated interim financial statements are disclosed within the Group's
accounting policies as disclosed in the IFRS financial statements for the year ended 31 October 2014. There have been no
significant changes in accounting estimates in the period.
4 Segmental information
The segmental information for the six months ended 30 April 2015 is as follows:
United Kingdom France Total
£m £m £m
Continuing operations
Revenue 38.2 12.2 50.4
Underlying EBITDA (operating profit before exceptional items, change in fair value of derivatives, gain/loss on investment properties, contingent rent and depreciation) 18.8 8.1 26.9
Change in fair value of derivatives - 0.2 0.2
Depreciation and contingent rent (0.4) (0.3) (0.7)
Operating profit before gain on investment properties 18.4 8.0 26.4
Gain on investment properties 43.2 0.7 43.9
Operating profit 61.6 8.7 70.3
Net finance expense (6.8) (1.3) (8.1)
Profit before tax 54.8 7.4 62.2
Total assets 652.4 184.4 836.8
The segmental information for the six months ended 30 April 2014 is as follows:
United Kingdom France Total
£m £m £m
Continuing operations
Revenue 33.9 13.0 46.9
Underlying EBITDA (operating profit before exceptional items, change in fair value of derivatives, gain/loss on investment properties, contingent rent and depreciation) 16.6 8.5 25.1
Exceptional items (0.6) - (0.6)
Change in fair value of derivatives - 0.7 0.7
Depreciation and contingent rent (0.3) (0.3) (0.6)
Operating profit before loss on investment properties 15.7 8.9 24.6
Loss on investment properties (3.7) (3.1) (6.8)
Operating profit 12.0 5.8 17.8
Net finance expense (8.6) (2.3) (10.9)
Profit before tax 3.4 3.5 6.9
Total assets 572.4 199.8 772.2
5 Exceptional items
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2015 2014 2014
(unaudited) (unaudited) (audited)
£m £m £m
Restructuring costs - (0.4) (0.8)
Other exceptional Items - (0.2) (0.2)
Total exceptional items - (0.6) (1.0)
Restructuring costs recognised in the comparative periods relate to costs incurred primarily in respect of organisational
changes, which were a fundamental element of the business' strategy.
6 Finance income and costs
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2015 2014 2014
(unaudited) (unaudited) (audited)
£m £m £m
Finance income
Fair value movement of derivatives 3.1 0.7 4.5
Unwinding of discount on CGS receivable 0.1 0.2 0.2
Total finance income 3.2 0.9 4.7
Finance costs
Interest payable on bank loans and overdrafts (5.7) (7.5) (13.6)
Amortisation of debt issuance costs on bank loans (0.1) - (0.1)
Underlying finance charges (5.8) (7.5) (13.7)
Interest on obligations under finance leases (1.9) (2.2) (4.2)
Fair value movement of derivatives (0.6) - (0.8)
Recycling of hedge reserve - - (3.4)
Net exchange losses (3.0) - (3.7)
Exceptional finance expense - (2.1) (2.1)
Total finance costs (11.3) (11.8) (27.9)
Net finance costs (8.1) (10.9) (23.2)
Included within interest payable of £5.7m (April 2014: £7.5m) is £0.5m (April 2014: £0.9m) of interest relating to
derivative financial instruments that are economically hedging the Group's borrowings. The change in fair value of
derivatives for the period is a net credit of £2.5m (April 2014: credit of £0.7m).
Exceptional finance costs of £2.1m recognised in the comparative periods were incurred in respect of the Group's debt
refinancing in January 2014.
7 Income tax charge
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2015 2014 2014
(unaudited) (unaudited) (audited)
£m £m £m
Current tax (0.6) (0.5) (0.9)
Deferred tax (1.8) (1.6) (4.7)
(2.4) (2.1) (5.6)
Income tax is recognised based on management's best estimate of the weighted average annual income tax rate expected for
the full financial year.
The tax charge relates solely to the Group's French business. The Group is a Real Estate Investment Trust ("REIT"), and as
a result is exempt from UK corporation tax on the profits and gains from its qualifying rental business in the UK provided
that it meets certain conditions. Non-qualifying profits and gains of the Group remain subject to corporation tax as
normal. The Group monitors its compliance with the REIT conditions. There have been no breaches of the conditions to date.
8 Deferred income tax
As at As at As at
30 April 30 April 31 October 2014
2015 2014
(unaudited) (unaudited) (audited)
£m £m £m
The amounts provided in the accounts are:
Revaluation of investment properties and tax depreciation 36.3 38.7 38.8
Other timing differences 0.7
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