REG - Safestore Hldgs plc - Interim Results <Origin Href="QuoteRef">SAFE.L</Origin> - Part 2
16/06/2016 07:05
- Part 2: For the preceding part double click ID:nRSP3321Ba
EPS (p) 9.0 7.6 18.4%
EPRA EPS (p) 9.0 7.0 28.6%
Management considers the above presentation of earnings to be representative of the underlying performance of the
business.
Underlying EBITDA increased by 8.9% to £29.3m (H1 2015: £26.9m) reflecting a 7.3% increase in revenue less a 5.5% increase
in the underlying cost base (see below). The leasehold rent charge has decreased by 13.3% from £4.5m in H1 2015 to £3.9m,
principally reflecting two fewer leases (at New Malden and High Wycombe), recent lease re-gears and the favourable
settlement of outstanding rent reviews.
Finance charges reduced by 13.8% from £5.8m in H1 2015 to £5.0m in H1 2016 reflecting the benefit of the Group's August
2015 refinancing, as well as lower average borrowings.
Given the Group's REIT status in the UK, tax is normally only payable in France. The current tax charge for the period
increased to £1.6m (H1 2015: £0.6m). The prior year benefitted from the utilisation of £1.3m of tax losses, which was not
repeated in H1 2016. However, this is offset by an equivalent reduction in the underlying deferred tax charge.
Management considers that the most representative earnings per share ("EPS") measure is cash tax adjusted EPS4, which
increased by 18.4% to 9.0p (H1 2015: 7.6p). EPRA EPS also reflects the deferred tax on underlying trading and increased by
28.6% to 9.0p from 7.0p in H1 2015.
Reconciliation of Underlying EBITDA
The table below reconciles the operating profit included in the income statement to underlying EBITDA.
H1 2016 H1 2015
£'m £'m
Operating profit 56.9 70.3
Adjusted for
- gain on investment properties (28.2) (43.9)
- depreciation 0.2 0.2
- contingent rent 0.1 0.5
- change in fair value of derivatives - (0.2)
- costs incurred relating to corporate transactions 0.3 -
Underlying EBITDA 29.3 26.9
The main reconciling item between operating profit and underlying EBITDA is the gain on investment properties, which has
decreased from £43.9m in H1 2015 to £28.2m in H1 2016. Whilst the rate of growth in value is slower than in the prior year,
it continues to reflect the benefit of our trading performance improvements. The Group's approach to the valuation of its
investment property portfolio at 30 April 2016 is discussed below.
During H1 2016, the Group incurred £0.3m of costs relating to corporate transactions, which are unrelated to the Group's
trading performance, so have been excluded from underlying EBITDA.
Underlying Profit by geographical region
The Group is organised and managed in two operating segments based on geographical region. The table below details the
underlying profitability of each region.
H1 2016 H1 2015
UK Paris Total UK Paris Total
£'m £'m £'m £'m £'m £'m
Revenue 41.1 13.0 54.1 38.2 12.2 50.4
Underlying cost of sales (15.4) (3.6) (19.0) (15.3) (3.3) (18.6)
Store EBITDA 25.7 9.4 35.1 22.9 8.9 31.8
Store EBITDA margin 63% 72% 65% 60% 73% 63%
Underlying administrative expenses (4.9) (0.9) (5.8) (4.1) (0.8) (4.9)
Underlying EBITDA 20.8 8.5 29.3 18.8 8.1 26.9
EBITDA margin 51% 65% 54% 49% 66% 53%
Leasehold rent (2.1) (1.8) (3.9) (2.6) (1.9) (4.5)
Underlying EBITDA after leasehold rent 18.7 6.7 25.4 16.2 6.2 22.4
EBITDA after leasehold rent margin 45% 52% 47% 42% 51% 44%
Certain costs previously reported as administrative expenses, primarily relating to marketing and the customer service
centre, are now reported within cost of sales. The prior period has been restated, but the restatement has had no impact on
previously reported profit.
Underlying EBITDA after leasehold rent in the UK increased by £2.5m to £18.7m (H1 2015: £16.2m). A £2.9m increase in
revenue was partly offset by cost increases totalling £0.4m, which are explained further below.
In Paris, underlying EBITDA after leasehold rent increased by £0.5m to £6.7m (H1 2015: £6.2m), with the impact of the
Sterling to Euro exchange rate broadly neutral for the period, however, as previously reported, the prior year benefitted
from £0.4m income from currency hedging arrangements which was not repeated in the current year. In local currency, revenue
improved by 6.8% to E17.3m (H1 2015: E16.2m), and underlying EBITDA after leasehold rent (excluding any prior year benefit
from the currency swap income) improved by 12.8% to E8.8m (H1 2015: E7.8m).
Further details in respect of the UK and Paris results are discussed above, under Trading Performance in the Strategy
Update section.
Revenue
Revenue for the Group is primarily derived from the rental of self-storage space and the sale of ancillary products such as
insurance and merchandise (e.g. packing materials and padlocks) in both the UK and France.
The split of the Group's revenues by geographical segment is set out below for H1 2016 and H1 2015.
H1 2016 % of total H1 2015 % of total % change
UK £'m 41.1 76% 38.2 76% 7.6%
Paris
Local currency E'm 17.3 16.2 6.8%
Average exchange rate E:£ 1.325 1.325
Paris in sterling £'m 13.0 24% 12.2 24% 6.6%
Total revenue 54.1 100% 50.4 100% 7.3%
The Group's revenue increased by 7.3% or £3.7m during the period. The Group's occupied space was 23,000 sq ft higher at 30
April 2016 (3.49 million sq ft) than at 30 April 2015 (3.47 million sq ft), with average occupancy during the period 1.8%
higher at 3.47 million sq ft (H1 2015: 3.41 million sq ft), and the average rental rate for the Group for the period was
4.7% higher at £26.02 than in H1 2015 (£24.86).
On a like-for-like basis, adjusting for the impact of store closures, the Group's revenue has increased by 10.4% since the
comparative period. The impact of Sterling against the Euro is broadly neutral, so revenue also increased by 10.4% on a
constant currency basis.
In the UK revenue increased by £2.9m or 7.6%, reflecting a strong improvement in average rental rates. On a like-for-like
basis, adjusted for the 2015 closures of Whitechapel and New Malden and the temporary closure of Wandsworth, revenue
increased by £4.3m or 11.7%. UK occupancy at 30 April 2016 was 2.69 million sq ft, the same as at 30 April 2015 despite the
closure of the three stores. The average space occupied during the period was up 0.7% compared with H1 2015 at 2.67 million
sq ft (H1 2015: 2.65 million sq ft) and the average rental rate increased 5.6% to £24.82 (H1 2015: £23.51).
In Paris, revenue increased by E1.1m or 6.8%. The average Euro exchange rate for H1 2016 was E1.325:£1, the same as for the
comparative period last year, so has only a negligible impact on the revenues of the Paris business when reported in
Sterling.
Paris closing occupancy at 30 April 2016 has increased by 2.6% since 30 April 2015 to 0.80 million sq ft and average
occupancy for the period of 0.80 million sq ft is a 4.7% increase compared to H1 2015. The average rental rate in France
was E39.71 for the period, an increase of 1.9% on H1 2015 (E38.97).
Analysis of Cost Base
Cost of sales
The table below details the key movements in cost of sales between H1 2015 and H1 2016.
Cost of sales H1 2016 H1 2015
£'m £'m
Reported cost of sales (19.3) (19.3)
Adjusted for:
Depreciation 0.2 0.2
Contingent rent 0.1 0.5
Underlying cost of sales (19.0) (18.6)
Underlying cost of sales for H1 2015 (18.6)
Foreign exchange net of swap income (0.4)
Store maintenance (0.1)
Store employee headcount and incentives 0.4
Other volume related cost of sales (0.3)
Underlying cost of sales for H1 2016 (19.0)
Note: Certain costs previously reported as administrative expenses, primarily relating to marketing and the customer
service centre, are now reported within cost of sales.
In order to arrive at underlying cost of sales adjustments are made to remove the impact of depreciation and contingent
rent.
Underlying cost of sales has increased by £0.4m, to £19.0m (H1 2015: £18.6m). £0.4m of foreign currency swap income earned
in H1 2015 was not repeated in the current year as a result of our allowing the hedge arrangements to lapse, and increases
in store maintenance (£0.1m) and volume related costs (£0.3m) were offset by savings in employee costs (£0.4m), which arose
primarily due to higher incentives paid in the prior period.
Administrative Expenses
The table below reconciles reported administrative expenses to underlying administrative expenses and details the key
movements in underlying administrative expenses between H1 2015 and H1 2016.
Administrative expenses H1 2016 H1 2015
£'m £'m
Reported administrative expenses (6.1) (4.7)
Adjusted for:
Exceptional items and transactions costs 0.3 -
Changes in fair value of derivatives - (0.2)
Underlying administrative expenses (5.8) (4.9)
Underlying administrative expenses for H1 2015 (4.9)
Employee remuneration (0.4)
Share-based payments (including national insurance) (0.2)
Property professional fees (0.2)
Other professional fees (0.1)
Underlying administrative expenses for H1 2016 (5.8)
Note: Certain costs previously reported as administrative expenses, primarily relating to marketing and the customer
service centre, are now reported within cost of sales.
In order to arrive at underlying administrative expenses adjustments are made to remove the impact of exceptional items,
corporate transaction costs and changes in the fair value of derivatives. During the period, the Group incurred £0.3m of
costs relating to corporate transactions.
Underlying administrative expenses increased by £0.9m to £5.8m (H1 2015: £4.9m). The increase arose primarily in the UK,
and is due to increased employee remuneration (£0.4m), primarily reflecting timing differences associated with the
recognition of employee incentives, and share-based payments (£0.2m), plus an increase in property professional fees
(£0.2m), arising from lease renegotiations and prospective projects.
Investment Properties
A full external valuation of the store portfolio is undertaken by the Group on an annual, rather than a bi-annual, basis.
At 30 April 2016, a sample of the Group's largest properties, representing approximately 45% of the value of the Group's
investment property portfolio at 31 October 2015, has been valued by the Group's external valuers, Cushman & Wakefield LLP
("C&W"). 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 2015 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 was as follows.
H1 2016 H1 2015
£'m £'m
Revaluation of investment properties 30.5 45.4
Revaluation of investment properties under construction (0.2) 0.6
Depreciation on leasehold properties (2.1) (2.1)
Gain on investment properties 28.2 43.9
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 £25.9m of the £30.3m net revaluation gain, with
£4.4m arising in France.
Operating profit
Reported operating profit decreased by £13.4m from £70.3m in H1 2015 to £56.9m in H1 2016, primarily reflecting the lower
investment property gain, partly offset by the £2.4m 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 2016 H1 2015
£'m £'m
Net bank interest payable (5.0) (5.8)
Interest on obligations under finance leases (1.7) (1.9)
Fair value movement on derivatives 2.8 2.5
Net exchange losses (4.0) (3.0)
Unwinding of discount on Capital Goods Scheme receivable 0.1 0.1
Net finance costs (7.8) (8.1)
Underlying finance charge
The underlying finance charge (net bank interest payable) has benefitted from a lower blended interest rate following the
re-financing undertaken by the Group in August 2015, as well as the benefit of net repayments of £7m of borrowings in the
UK and E5m in France since April 2015, which drove a £0.8m decrease to £5.0m (H1 2015: 5.8m).
Based on the drawn debt position as at 30 April 2016, 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 £126.0 £126.0 £90.0 71% 1.50% 1.45% 0.59% 2.70%
UK Revolver £125.0 £23.0 - - 1.50% - 0.58% 2.08%
UK Revolver- non-utilisation £102.0 - - - 0.60% - - 0.60%
Euro Revolver E70.0 £31.4 £23.5 75% 1.50% 0.31% (0.20%) 1.68%
Euro Revolver- non-utilisation E30.0 - - - 0.60% - - 0.60%
US Private Placement 2019 $65.6 £44.9 £44.9 100% 5.52% - - 5.83%
US Private Placement 2024 $47.3 £32.4 £32.4 100% 6.29% - - 6.74%
Unamortised finance costs - (£2.0) - - - - - -
Total £383.2 £255.7 £190.8 75% 4.08%
The UK term loan of £126m is fully drawn as at 30 April 2016 and attracts a bank margin of 1.50%. The Group has interest
rate hedge agreements in place to June 2020 swapping LIBOR on £90.0m at an effective rate of 1.447%.
The Group increased the committed UK revolver facility, from £80m to £125m, in advance of the anticipated exercise of the
option to acquire Space Maker, by utilising £45m of the uncommitted £60m credit facility. The amount drawn under the UK
revolver has increased by a net £3m during the period, to £23m as at 30 April 2016. The drawn amounts also attract a bank
margin of 1.50%, and the Group pays a non-utilisation fee of 0.6% on undrawn balances.
The Euro revolver of E70m has E40m (£31.4m) drawn as at 30 April 2016, following the repayment of E5m during the period,
and attracts a bank margin of 1.50%. The Group has interest rate hedges in place to June 2020 swapping EURIBOR on E30m at
an effective rate of 0.309%. In addition, the Group pays a non-utilisation fee of 0.6% on undrawn balances.
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 75% of the Group's drawn debt. Overall, the Group had an effective interest rate
on its outstanding borrowings of 4.08% at 30 April 2016 (H1 2015: 4.38%). The increase in the effective interest rate
since 31 October 2015 (3.90%) has arisen due to commitment fees on the increased committed UK revolver facility, as well as
a greater weighting towards the higher interest rate on the US Private Placement Notes due to the strengthening of the US
dollar.
Non-underlying finance charge
Interest on finance leases was £1.7m (H1 2015: £1.9m) 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 £4.5m in H1 2015 to £3.9m in H1 2016, principally reflecting two
fewer leases (at New Malden and High Wycombe), recent lease re-gears and the favourable settlement of outstanding rent
reviews.
Net finance costs includes £4.0m (H1 2015: £3.0m) of net exchange losses arising primarily on the Group's US dollar
denominated borrowings. This is partly offset by the net fair value gain on derivatives of £2.8m (H1 2015: £2.5m) which
includes a £4.4m (H1 2015: £3.1m) gain in respect of cross currency swaps taken out by the Group to hedge against movements
in the US dollar denominated borrowings.
Tax
The tax charge for the period is analysed below:
Tax charge H1 2016 H1 2015
£'m £'m
Underlying current tax (1.6) (0.6)
Current tax (1.6) (0.6)
Underlying deferred tax - (1.3)
Tax on investment properties movement (1.9) (0.6)
Tax on revaluation of interest rate swaps 0.1 -
Other - 0.1
Deferred tax (1.8) (1.8)
Tax charge (3.4) (2.4)
The income tax charge in the period was £3.4m (H1 2015: £2.4m).
In the UK the Group is a REIT, so the tax charge relates to the Paris business. The current tax charge for the period
amounted to £1.6m (H1 2015: £0.6m). The prior year benefitted from the utilisation of £1.3m of tax losses, which was not
repeated in H1 2016, however this is offset by an equivalent reduction in the underlying deferred tax charge, which reduced
to £nil for the period (H1 2015: £1.3m).
Profit after tax
The profit after tax for the period was £45.7m as compared with £59.8m in H1 2015. Basic EPS was 22.0 pence (H1 2015: 28.8
pence) and diluted EPS was 21.8 pence (H1 2015: 28.6 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 3.6 pence per share, an increase of 20% on the interim dividend paid last
year of 3.0 pence. This will amount to £7.5m (H1 2015: £6.2m). The dividend will be paid on 12 August 2016 to shareholders
who are on the Company's register at the close of business on 8 July 2016. The ex-dividend date will be 7 July 2016. 50%
(H1 2015: 100%) of the dividend will be paid as a property income dividend ("PID").
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, has 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 Paris Total Paris
£'m £'m £'m E'm
Value as at 1 November 2015 597.6 177.9 775.5 249.3
Currency translation movement - 17.7 17.7 -
Additions 2.2 0.7 2.9 1.0
Revaluation 26.1 4.4 30.5 5.8
Value at 30 April 2016 625.9 200.7 826.6 256.1
The table above summarises the movement in the valuations.
The exchange rate at 30 April 2016 was E1.28:£1 compared to E1.40:£1 at 31 October 2015. This movement in the foreign
exchange rate has resulted in a £17.7m favourable currency translation movement in the period, reversing some of the
adverse translation movements experienced in recent prior periods. This impacts 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 property portfolio valuation has increased by £51.1m from the valuation of £775.5m at 31 October 2015. This reflects
the gain on valuation of £30.5m plus capital additions of £2.9m, primarily in respect of the redevelopment of our
Wandsworth store, and the £17.7m exchange gain described above.
The Company's pipeline of expansion stores is valued at £12.0m as at 30 April 2016, and includes the acquisition of our new
freehold site in eastern Paris at Marnes-la-Vallée in the town of Emerainville.
The adjusted EPRA NAV per share is 278.1 pence, an increase of 8.5% since 31 October 2015, mainly due to the revaluation
and exchange 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 £293.6m at 30 April 2016, an increase of £10.8m during the period
from £282.8m at 31 October 2015. Total capital (net debt plus equity) increased from £773.4m at 31 October 2015 to £827.5m
at 30 April 2016. The net impact is that the gearing ratio has reduced from 37% to 35% 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 2016 the Group LTV ratio was 30% compared with 32% at 31 October 2015.
The Group's £126m UK term loan facility and £125m UK revolver both run to June 2020 and currently attract a margin of
1.50%. The UK revolver facility was increased by £45m during the period, from £80m, in anticipation of exercise of the
option to acquire Space Maker. The amount drawn under the UK revolver has increased by a net £3m during the period, from
£20m at 31 October 2015 to £23m at 30 April 2016.
The Group's Euro revolver is E70m, of which E40m had been drawn as at 30 April 2016, following the repayment of E5m during
the period. It also runs to June 2020 and currently attracts a margin of 1.50%.
Of the US private placement debt which totals $113 million issued in 2012, $66 million was issued at 5.52% (swapped to
5.83%) with 2019 maturity and $47 million was issued at 6.29% (swapped to 6.74%) with 2024 maturity.
Borrowings under the existing loan facilities are subject to certain financial covenants. 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 2.2:1, and in July 2016 this will increase to 2.4:1 where it will remain until the end of the
facilities' term. Interest cover for the period to 30 April 2016 was 5.1:1, providing material headroom to the impending
increased covenant level. The LTV covenant is 60% in both the UK and France, where it will remain until the end of the
facilities' term. As at 30 April 2016, there is significant headroom in both the UK LTV and the French LTV covenant
calculations.
The Group is in compliance with its covenants at 30 April 2016 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 2016 and H1 2015.
H1 2016 H1 2015
£'m £'m
Underlying EBITDA 29.3 26.9
Working capital/exceptionals/other (0.1) 0.2
Operating cash inflow 29.2 27.1
Interest payments (4.7) (6.7)
Leasehold rent payments (3.9) (4.5)
Tax payments (0.9) (0.2)
Free cash flow (before investing and financing activities) 19.7 15.7
Capital expenditure - investment properties (9.2) (4.3)
Capital expenditure - property, plant and equipment (0.4) (0.1)
Net inflow after investing activities 10.1 11.3
Dividends paid (12.1) (10.3)
Net repayment of borrowings (0.8) (3.0)
Debt issuance costs (0.4) -
Net decrease in cash (3.2) (2.0)
Operating cash flow increased by £2.1m in the period, principally reflecting the £2.4m increase in underlying EBITDA.
Free cash flow (before investing and financing activities) grew by 25.5% to £19.7m (H1 2015: £15.7m) reflecting stronger
trading performance, lower interest costs and reduced leasehold rent payments arising from the August 2015 re-financing and
favourable rent charges.
Investing activities has increased by £5.2m to £9.6m (H1 2015: £4.4m), primarily reflecting capital expenditure on our
three UK development sites plus the purchase and development of our new freehold site in eastern Paris at Marnes-la-Vallée
in the town of Emerainville. The prior period included the purchase of the High Wycombe freehold for £1.8m.
Dividends paid to shareholders increased from £10.3m in H1 2015 to £12.1m in H1 2016, and the Group made a net £0.8m of
borrowings repayments.
Consolidated income statement
for the six months ended 30 April 2016
Six months Ended30 April 2016 Six months Ended30 April 2015(restated) Year Ended31 October2015(restated)
(unaudited) (unaudited) (audited)
Note £m £m £m
Revenue 4 54.1 50.4 104.8
Cost of sales (19.3) (19.3) (38.3)
Gross profit 34.8 31.1 66.5
Administrative expenses (6.1) (4.7) (11.2)
Underlying EBITDA 4 29.3 26.9 57.1
Costs incurred relating to corporate transactions (0.3) - -
Change in fair value of derivatives - 0.2 (0.3)
Depreciation and contingent rent (0.3) (0.7) (1.5)
Operating profit before gain on investment properties 28.7 26.4 55.3
Gain on investment properties 10 28.2 43.9 78.9
Operating profit 56.9 70.3 134.2
Finance income 5 4.5 3.2 3.2
Finance expense 5 (12.3) (11.3) (19.2)
Profit before income tax 4 49.1 62.2 118.2
Income tax charge 6 (3.4) (2.4) (9.5)
Profit for the period 45.7 59.8 108.7
Earnings per share for profit attributable to the equity holders
- basic (pence) 9 22.0 28.8 52.4
- diluted (pence) 9 21.8 28.6 52.0
All items in the income statement relate to continuing operations.
Certain costs previously reported as administrative expenses, primarily relating to marketing and the customer service
centre, are now reported within cost of sales, as the directors believe this provides a fairer presentation. Prior periods
have been restated, but the restatement has had no impact on previously reported profit (see note 3).
Underlying EBITDA is defined as operating profit before exceptional items, corporate transaction costs, change in fair
value of derivatives, gain/loss on investment properties, contingent rent and depreciation.
An interim dividend of 3.6 pence per ordinary share has been declared for the period ended 30 April 2016 (30 April 2015:
3.0 pence).
Consolidated statement of comprehensive income
for the six months ended 30 April 2016
Six monthsEnded30 April2016 Six monthsEnded30 April2015 YearEnded31 October2015
(unaudited) (unaudited) (audited)
£m £m £m
Profit for the period 45.7 59.8 108.7
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss
Currency translation differences 10.8 (9.3) (9.9)
Total other comprehensive income, net of tax 10.8 (9.3) (9.9)
Total comprehensive income for the period 56.5 50.5 98.8
Consolidated balance sheet
as at 30 April 2016
30 April2016 30 April2015 31 October2015
(unaudited) (unaudited) (audited)
Note £m £m £m
Non-current assets
Investment properties 10 826.6 737.6 775.5
Interests in leasehold properties 10 49.1 49.1 47.1
Investment properties under construction 10 12.0 5.9 6.0
Property, plant and equipment 1.8 1.5 1.6
Derivative financial instruments 14 4.3 0.8 0.6
Deferred tax assets 7 0.2 0.9 0.1
Other receivables 3.5 4.9 3.4
897.5 800.7 834.3
Current assets
Inventories 0.2 0.2 0.2
Trade and other receivables 22.4 22.3 19.4
Derivative financial instruments 14 - 0.5 -
Cash and cash equivalents 11.2 13.1 13.8
33.8 36.1 33.4
Total assets 931.3 836.8 867.7
Current liabilities
Bank borrowings 13 - (10.0) -
Trade and other payables (40.8) (38.3) (36.5)
Current income tax liabilities (1.5) (0.2) (0.7)
Obligations under finance leases (7.8) (7.5) (7.2)
(50.1) (56.0) (44.4)
Non-current liabilities
Bank borrowings 13 (255.7) (251.2) (249.5)
Derivative financial instruments 14 (2.4) (3.0) (1.4)
Deferred tax liabilities 7 (47.9) (37.0) (41.9)
Obligations under finance leases (41.3) (41.6) (39.9)
(347.3) (332.8) (332.7)
Total liabilities (397.4) (388.8) (377.1)
Net assets 533.9 448.0 490.6
Shareholders' equity
Ordinary shares 15 2.1 2.1 2.1
Share premium 60.0 60.0 60.0
Translation reserve (2.0) (12.2) (12.8)
Retained earnings 473.8 398.1 441.3
Total equity 533.9 448.0 490.6
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 2016
Sharecapital Sharepremium Translationreserve Retainedearnings Totalequity
£m £m £m £m £m
At 1 November 2015 2.1 60.0 (12.8) 441.3 490.6
Total comprehensive income for the period - - 10.8 45.7 56.5
Transactions with owners in their capacity as owner:
Dividends (note 8) - - - (13.8) (13.8)
Employee share options - - - 0.6 0.6
At 30 April 2016 2.1 60.0 (2.0) 473.8 533.9
Condensed consolidated statement of changes in equity
for the six months ended 30 April 2015
Sharecapital Sharepremium Translationreserve Retainedearnings TotalEquity
£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 8) - - - (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 year ended 31 October 2015
Sharecapital Sharepremium Translationreserve Retainedearnings TotalEquity
£m £m £m £m £m
At 1 November 2014 2.1 60.0 (2.9) 348.8 408.0
Total comprehensive income for the year - - (9.9) 108.7 98.8
Transactions with owners in their capacity as owner:
Dividends (note 8) - - - (17.2) (17.2)
Employee share options - - - 1.0 1.0
At 31 October 2015 2.1 60.0 (12.8) 441.3 490.6
Consolidated cash flow statement
for the six months ended 30 April 2016
Six monthsEnded30 April2016 Six monthsEnded30 April2015 Year Ended31 October2015
(unaudited) (unaudited) (audited)
£m £m £m
Profit before income tax 49.1 62.2 118.2
Gain on the revaluation of investment properties (28.2) (43.9) (78.9)
Depreciation 0.2 0.2 0.4
Change in fair value of derivatives - (0.2) 0.3
Finance income (4.5) (3.2) (3.2)
Finance expense 12.3 11.3 19.2
Employee share options 0.6 0.5 1.0
Increase in trade and other receivables (2.4) (2.6) 0.2
Increase in trade and other payables 2.0 2.3 0.6
Cash flows from operating activities 29.1 26.6 57.8
Interest paid (6.4) (8.6) (15.8)
Tax paid (0.9) (0.2) (0.6)
Net cash inflow from operating activities 21.8 17.8 41.4
Cash flows from investing activities
Expenditure on investment and development properties (9.2) (4.3) (7.5)
Proceeds in respect of Capital Goods Scheme - - 1.6
Purchase of property, plant and equipment (0.4) (0.1) (0.5)
Proceeds from disposal of investment properties - - 1.5
Net cash outflow from investing activities (9.6) (4.4) (4.9)
Cash flows from financing activities
Equity dividends paid (12.1) (10.3) (17.2)
Proceeds from borrowings 5.0 - -
Debt issuance costs (0.4) - (1.4)
Hedge breakage payments - - (2.0)
Finance lease principal payments (2.1) (2.1) (4.1)
Repayment of borrowings (5.8) (3.0) (13.0)
Net cash outflow from financing activities (15.4) (15.4) (37.7)
Net decrease in cash and cash equivalents (3.2) (2.0) (1.2)
Exchange gain/(loss) on cash and cash equivalents 0.6 (0.2) (0.3)
Opening cash and cash equivalents 13.8 15.3 15.3
Closing cash and cash equivalents 11.2 13.1 13.8
Reconciliation of net cash flow to movement in net debt
for the six months ended 30 April 2016
Six monthsEnded30 April2016 Six monthsEnded30 April2015 YearEnded31 October2015
(unaudited) (unaudited) (audited)
£m £m £m
Net decrease in cash and cash equivalents (after exchange adjustments) (2.6) (2.2) (1.5)
(Increase)/decrease in debt financing (8.2) 5.3 19.0
(Increase)/decrease in net debt (10.8) 3.1 17.5
Net debt at start of period (282.8) (300.3) (300.3)
Net debt at end of period (293.6) (297.2) (282.8)
Notes to the interim report for the six months ended 30 April 2016
1 General information
The Company is a public limited company incorporated in Great Britain 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 15 June 2016.
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 2015,
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 4 April 2016.
This condensed consolidated interim financial information for 30 April 2016 and 30 April 2015 is unaudited. The interim
financial information for 30 April 2016 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 2016 has been 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
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