REG - Safestore Hldgs plc - Interim results <Origin Href="QuoteRef">SAFE.L</Origin> - Part 3
15/06/2017 07:06
- Part 3: For the preceding part double click ID:nRSO1236Ib
(1.4)
Cash flows from operating activities 35.4 29.1 61.9
Interest paid (8.0) (6.4) (13.2)
Tax paid (1.6) (0.9) (1.7)
Net cash inflow from operating activities 25.8 21.8 47.0
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired - - (41.8)
Expenditure on investment and development properties (13.8) (9.2) (28.3)
Proceeds in respect of Capital Goods Scheme - - 1.5
Purchase of property, plant and equipment (0.3) (0.4) (0.8)
Proceeds from disposal of investment properties 3.4 - -
Net cash outflow from investing activities (10.7) (9.6) (69.4)
Cash flows from financing activities
Issue of share capital - - 0.1
Equity dividends paid (14.7) (12.1) (21.3)
Proceeds from borrowings 17.4 5.0 58.4
Debt issuance costs - (0.4) (0.4)
Finance lease principal payments (2.6) (2.1) (4.6)
Repayment of borrowings (14.0) (5.8) (19.8)
Net cash (outflow)/inflow from financing activities (13.9) (15.4) 12.4
Net increase/(decrease) in cash and cash equivalents 1.2 (3.2) (10.0)
Exchange (loss)/gain on cash and cash equivalents (0.3) 0.6 1.6
Opening cash and cash equivalents 5.4 13.8 13.8
Closing cash and cash equivalents 6.3 11.2 5.4
Reconciliation of net cash flow to movement in net debt
for the six months ended 30 April 2017
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
£m £m £m
Net increase/(decrease) in cash and cash equivalents (after exchange adjustments) 0.9 (2.6) (8.4)
Decrease/(increase) in debt financing 7.6 (8.2) (78.0)
Decrease/(increase) in net debt 8.5 (10.8) (86.4)
Net debt at start of period (369.2) (282.8) (282.8)
Net debt at end of period (360.7) (293.6) (369.2)
Notes to the interim report for the six months ended 30 April 2017
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 is listed on the London Stock Exchange.
This interim report was approved for issue on 14 June 2017.
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 2016,
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 23 March 2017.
This condensed consolidated interim financial information for 30 April 2017 and 30 April 2016 is unaudited. The interim
financial information for 30 April 2017 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 2017 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 future, a
period of not less than twelve 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 2016, 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 2017 applicable to companies under IFRS. The IFRS and IFRIC interpretations
as adopted by the European Union that will be applicable at 31 October 2017, 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 14 June 2017 and publication of the annual IFRS financial statements for
the year ending 31 October 2017.
The accounting policies and presentation applied are consistent with those in the annual financial statements for the year
ended 31 October 2016, as described in those financial statements. The following new or revised accounting standards or
IFRIC interpretations are applicable for the first time in the year ended 31 October 2017:
IFRS 14 'Regulatory Deferral Accounts';
IFRS 10, IFRS 12 and IAS 28 Amendments relating to investment entities: applying the consolidation exception;
IFRS 11 Amendments relating to acquisitions of interests in joint operations;
IAS 1 Amendments relating to the Disclosure Initiative
IAS 16 and IAS 38 Amendments relating to clarification of acceptable methods of depreciation and amortisation;
IAS 16 and IAS 41 Amendments relating to bearer plants;
IAS 27 Amendments relating to equity method in separate financial statements; and
Annual improvements to IFRSs 2012-2014 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 2016. 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 2017 is as follows:
United Kingdom France Total
£m £m £m
Continuing operations
Revenue 47.3 15.3 62.6
Underlying EBITDA 24.3 9.9 34.2
Depreciation and contingent rent (0.4) - (0.4)
Operating profit before gain on investment properties 23.9 9.9 33.8
Gain on investment properties 23.5 7.3 30.8
Operating profit 47.4 17.2 64.6
Net finance expense (8.8) (0.8) (9.6)
Profit before tax 38.6 16.4 55.0
Total assets 822.5 263.5 1,086.0
The segmental information for the six months ended 30 April 2016 is as follows:
United Kingdom France Total
£m £m £m
Continuing operations
Revenue 41.1 13.0 54.1
Underlying EBITDA 20.8 8.5 29.3
Costs incurred relating to corporate transactions (0.3) - (0.3)
Depreciation and contingent rent (0.2) (0.1) (0.3)
Operating profit before gain on investment properties 20.3 8.4 28.7
Gain on investment properties 25.0 3.2 28.2
Operating profit 45.3 11.6 56.9
Net finance expense (6.8) (1.0) (7.8)
Profit before tax 38.5 10.6 49.1
Total assets 704.8 226.5 931.3
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.
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.
5 Finance income and costs
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
£m £m £m
Finance income
Fair value movement of derivatives 0.2 4.4 20.9
Unwinding of discount on Capital Goods Scheme receivable 0.1 0.1 0.1
Net exchange gains 5.4 - -
Total finance income 5.7 4.5 21.0
Finance costs
Interest payable on bank loans and overdrafts (5.1) (4.8) (9.7)
Amortisation of debt issuance costs on bank loans (0.2) (0.2) (0.4)
Underlying finance charges (5.3) (5.0) (10.1)
Interest on obligations under finance leases (2.2) (1.7) (3.7)
Fair value movement of derivatives (7.8) (1.6) (2.5)
Net exchange losses - (4.0) (19.1)
Total finance costs (15.3) (12.3) (35.4)
Net finance costs (9.6) (7.8) (14.4)
Included within interest payable of £5.1m (April 2016: 4.8m) is £0.6m (April 2016: £0.5m) 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 charge of £7.6m (April 2016: net credit of £2.8m).
6 Income tax credit/(charge)
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
£m £m £m
Current tax (2.0) (1.6) (3.7)
Deferred tax 5.8 (1.8) (3.8)
3.8 (3.4) (7.5)
Income tax is recognised based on management's best estimate of the weighted average annual income tax rate expected for
the full financial year.
In France, the 2017 Finance Bill, which was adopted in December 2016, introduced a reduction in the income tax rate from
33.33% to 28.0%, applicable progressively from 2017 to 2020 according to size of company. As a result, the deferred tax
credit/(charge) includes a non-recurring deferred tax credit of £8.7m (April 2016: £nil) relating to this change.
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.
7 Deferred income tax
As at As at As at
30 April 30 April 31 October 2016
2017 2016
(unaudited) (unaudited) (audited)
£m £m £m
The amounts provided in the accounts are:
Revaluation of investment properties and tax depreciation 47.1 47.2 56.3
Other timing differences 0.5 0.7 0.8
Deferred tax liabilities 47.6 47.9 57.1
Interest rate swap instruments (0.1) (0.2) (0.2)
Deferred tax assets (0.1) (0.2) (0.2)
Net deferred tax liability 47.5 47.7 56.9
As at 30 April 2017, the Group had trading losses of £5.8m (April 2016: £10.7m) and capital losses of £36.4m (April 2016:
£36.4m) in respect of its UK operations. No deferred tax asset has been recognised in respect of these losses.
8 Dividends
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
£m £m £m
For the year ended 31 October 2015:
Final dividend - paid 8 April 2016 (6.65p per share) - 13.8 13.8
For the year ended 31 October 2016:
Interim dividend - paid 12 August 2016 (3.60p per share) - - 7.5
Final dividend - paid 7 April 2017 (8.05p per share) 16.8 - -
Dividends in the statement of changes in equity 16.8 13.8 21.3
Timing difference on payment of withholding tax (2.1) (1.7) -
Dividends in the cash flow statement 14.7 12.1 21.3
An interim dividend of 4.2 pence per ordinary share (April 2016: 3.6 pence) has been declared. The ex-dividend date will be
13 July 2017 and the record date 14 July 2017, with an intended payment date of 18 August 2017.
It is intended that 50% (April 2016: 50%) of the interim dividend of 4.2 pence per ordinary share (April 2016: 3.6 pence)
will be paid as a REIT Property Income Distribution ("PID") net of withholding tax where appropriate.
The interim dividend, amounting to £8.8m (April 2016: £7.5m), has not been included as a liability at 30 April 2017. It
will be recognised in shareholders' equity in the year to 31 October 2017.
9 Earnings per ordinary share
Basic earnings per share has been calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the period/year excluding ordinary shares held by the Safestore
Employee Benefit Trust. Diluted earnings per share are calculated by adjusting the weighted average numbers of ordinary
shares to assume conversion of all dilutive potential shares. The Company has one category of dilutive potential ordinary
shares: share options. For the share options, a calculation is done to determine the number of shares that could have been
acquired at fair value (determined as the average annual market price of the Company's shares) based on the monetary value
of the subscription rights attached to the outstanding share options. The number of shares calculated as above is compared
with the number of shares that would have been issued assuming the exercise of the share options.
Six months ended Six months ended Year ended
30 April 2017 30 April 2016 31 October 2016
(unaudited) (unaudited) (audited)
Earnings Shares million Pence Earnings Shares million Pence per share Earnings Shares million Pence
£m per share £m £m per share
Basic 58.8 209.0 28.1 45.7 207.8 22.0 87.4 208.2 42.0
Dilutive share options - 1.0 (0.1) - 1.5 (0.2) - 1.5 (0.3)
Diluted 58.8 210.0 28.0 45.7 209.3 21.8 87.4 209.7 41.7
Adjusted earnings per share
Adjusted earnings per share represents profit after tax adjusted for the valuation movement on investment properties,
exceptional items, change in fair value of derivatives and the associated tax thereon. As an industry standard measure,
European Public Real Estate Association ("EPRA") earnings are presented below. Cash tax adjusted earnings are also
presented by deducting all deferred taxation from the EPRA earnings. The Directors consider that these alternative measures
provide useful information on the performance of the Group.
Six months ended Six months ended Year ended
30 April 2017 30 April 2016 31 October 2016
(unaudited) (unaudited) (audited)
Earnings/(loss) Shares million Pence Earnings/ Shares million Pence per share Earnings/ Shares million Pence
£m per share (loss) (loss) per share
£m £m
Basic 58.8 209.0 28.1 45.7 207.8 22.0 87.4 208.2 42.0
Adjustments:
Gain on investment properties (30.8) - (14.7) (28.2) - (13.6) (41.7) - (20.1)
Exceptional items - - - - - - (4.3) - (2.1)
Costs relating to corporate transactions - - - 0.3 - 0.1 - - -
Unwinding of discount on CGS receivable (0.1) - - (0.1) - - (0.1) - -
Net exchange (gains) / losses (5.4) - (2.6) 4.0 - 1.9 19.1 - 9.2
Change in fair value of derivatives 7.6 - 3.6 (2.8) - (1.3) (18.4) - (8.8)
Tax on adjustments (6.3) - (3.0) 1.4 - 0.7 2.9 - 1.4
Adjusted 23.8 209.0 11.4 20.3 207.8 9.8 44.9 208.2 21.6
EPRA adjusted:
Depreciation of leasehold properties (2.6) - (1.2) (2.1) - (1.0) (4.6) - (2.2)
Tax on leasehold depreciation adjustment 0.5 - 0.2 0.4 - 0.2 0.9 - 0.4
EPRA basic 21.7 209.0 10.4 18.6 207.8 9.0 41.2 208.2 19.8
Adjustment for underlying deferred tax - - - - - - - - -
Adjusted cash tax earnings 21.7 209.0 10.4 18.6 207.8 9.0 41.2 208.2 19.8
10 Property portfolio
Investmentproperties Interest in Investment Totalinvestmentproperties
leasehold properties under construction
properties
£m £m £m £m
At 1 November 2016 943.3 58.9 10.9 1,013.1
Additions 3.7 0.3 8.4 12.4
Disposals (3.4) - - (3.4)
Reclassification 10.9 - (10.9) -
Revaluation movement 33.4 - - 33.4
Depreciation - (2.6) - (2.6)
Exchange movements (15.9) (1.0) (0.1) (17.0)
At 30 April 2017 972.0 55.6 8.3 1,035.9
InvestmentProperties Interest in Investment Totalinvestmentproperties
leasehold properties under construction
properties
£m £m £m £m
At 1 November 2015 775.5 47.1 6.0 828.6
Additions 2.9 3.0 6.1 12.0
Revaluation movement 30.5 - (0.2) 30.3
Depreciation - (2.1) - (2.1)
Exchange movements 17.7 1.1 0.1 18.9
At 30 April 2016 826.6 49.1 12.0 887.7
The Group has classified investment property and investment property under construction, held at fair value, within Level 3
of the fair value hierarchy. There were no transfers to or from Level 3 during the period. The fair valuation exercise
undertaken at 30 April 2017 is explained in note 11.
11 Valuations
External valuation
A sample of the Group's largest properties, representing approximately 42% of the value of the Group's investment property
portfolio at 31 October 2016, has been valued by the Group's external valuers, Cushman & Wakefield LLP ("C&W"), as at 30
April 2017. The valuation has been carried out in accordance with the current UK edition of the RICS Valuation -
Professional Standards, published by The Royal Institution of Chartered Surveyors ("the Red Book"). The valuation of each
of the investment properties has been prepared on the basis of fair value as a fully equipped operational entity, having
regard to trading potential. The valuation has been provided for accounts purposes and, as such, is a Regulated Purpose
Valuation as defined in the Red Book. In compliance with the disclosure requirements of the Red Book, C&W has confirmed
that:
· of the members of the RICS who have been the signatories to the valuations provided to the Group for the same
purposes as this valuation, one has done so since October 2006 and the other has done so since October 2016;
· C&W has been carrying out regular valuations for the same purpose as this valuation on behalf of the Group since
October 2006;
· C&W does not provide other significant professional or agency services to the Group;
· in relation to the preceding financial year of C&W, the proportion of total fees payable by the Group to the total
fee income of the firm is less than 5%; and
· the fee payable to C&W is a fixed amount per property and is not contingent on the appraised value.
Market uncertainty
C&W's valuation report comments on valuation uncertainty resulting from low liquidity in the market for self-storage
property. C&W notes that in the UK since the start of 2013 there have only been nine transactions involving multiple
assets and thirteen single asset transactions, and C&W is aware of only one recent comparable transaction in the Paris
market. C&W states that due to the lack of comparable market information in the self-storage sector, there is greater
uncertainty attached to its opinion of value than would be anticipated during more active market conditions.
Portfolio premium
C&W's valuation report further confirms that the properties have been valued individually but that if the portfolio was to
be sold as a single lot or in selected groups of properties, the total value could be different. C&W states that in current
market conditions it is of the view that there could be a material portfolio premium.
Further details of the valuation carried out by C&W as at 31 October 2016, including the valuation method and assumptions,
are set out in note 11 to the Group's annual report and financial statements for the year ended 31 October 2016. This note
should be read in conjunction with note 11 of the Group's annual report.
Directors' valuation
In addition, at the same date, the directors have prepared estimates of fair values for the remaining 58% of the Group's
investment property portfolio, incorporating assumptions for estimated absorption, revenue growth and capitalisation rates
to reflect current market conditions and trading.
Assumptions
The key assumptions incorporated into both the external valuation and the directors' valuation, calculated on a weighted
average basis across the entire portfolio, are:
· Net operating income is based on projected revenue received less projected operating costs together with a central
administration charge of 6% of the estimated annual revenue subject to a cap and collar. The initial net operating income
is calculated by estimating the net operating income in the first twelve months following the valuation date.
· The net operating income in future years is calculated assuming either straight line absorption from day one actual
occupancy or variable absorption over years one to four of the cash flow period, to an estimated stabilised/mature
occupancy level. In the valuations the assumed stabilised occupancy level for the trading stores (both freeholds and all
leaseholds) open at 30 April 2017 averages 80.80% (31 October 2016: 80.23%). The projected revenues and costs have been
adjusted for estimated cost inflation and revenue growth. The average time assumed for stores to trade at their maturity
levels is 29.88 months (31 October 2016: 23.78 months).
· The capitalisation rates applied to existing and future net cash flows have been estimated by reference to
underlying yields for industrial and retail warehouse property, yields for other trading property types such as student
housing and hotels, bank base rates, ten year money rates, inflation and the available evidence of transactions in the
sector. The valuations included in the accounts assume rental growth in future periods. If an assumption of no rental
growth is applied to the valuations, the net initial yield pre-administration expenses for the 127 mature stores (i.e.
excluding those stores categorised as "developing") is 7.49% (31 October 2016: 7.98%), rising to stabilised net yield
pre-administration expenses of 9.04% (31 October 2016: 8.99%).
· The future net cash flow projections (including revenue growth and cost inflation) have been discounted at a rate
that reflects the risk associated with each asset. The weighted average annual discount rate adopted (for both freeholds
and all leaseholds) is 10.73% (31 October 2016: 10.75%).
· Purchaser's costs in the range of approximately 6.0% to 6.8% for the UK and 7.5% for France have been assumed
initially, reflecting the progressive SDLT rates brought into force in March 2016 in the UK, and sales plus purchaser's
costs totalling approximately 8.0% to 8.8% (UK) and 9.5% (France) are assumed on the notional sales in the tenth year in
relation to freehold and long leasehold stores.
All other factors being equal, higher net operating income would lead to an increase in the valuation of a store and an
increase in the capitalisation rate or discount rate would result in a lower valuation, and vice versa. Higher assumptions
for stabilised occupancy, absorption rate, rental rate and other revenue, and a lower assumption for operating costs, would
result in an increase in projected net operating income, and thus an increase in valuation.
As a result of these exercises, as at 30 April 2017, the Group's investment property portfolio has been valued at £972.0m
(April 2016: £826.6), and a revaluation gain of £33.4m (April 2016: £30.5m) has been recognised in the income statement for
the period.
A full external valuation of the Group's investment property portfolio will be performed at 31 October 2017.
12 Net assets per share
As at As at As at
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
Analysis of net asset value £m £m £m
Net assets 620.2 533.9 587.4
Adjustments to exclude:
Fair value of derivative financial instruments (net of deferred tax) (10.0) (2.1) (17.7)
Deferred tax liabilities on the revaluation of investment properties 47.1 47.2 56.3
EPRA net asset value 657.3 579.0 626.0
Basic net assets per share (pence) 296.3 256.4 281.5
EPRA basic net assets per share (pence) 314.1 278.1 300.0
Diluted net assets per share (pence) 295.0 254.6 279.5
EPRA diluted net assets per share (pence) 312.6 276.1 297.9
Number Number Number
Shares in issue 209,289,938 208,210,529 208,656,168
Basic net assets per share is shareholders' funds divided by the number of shares at the period end. The number of shares
in issue at the period end excludes 16,263 shares (April 2016: 80,420 shares) held by the Safestore Employee Benefit Trust.
Diluted net assets per share is shareholders' funds divided by the number of shares at the period end, adjusted for
dilutive share options of 973,694 shares (April 2016: 1,462,774 shares). As an industry standard measure, European Public
Real Estate Association ("EPRA") net asset values are presented.
13 Borrowings
As explained in note 18, the Group has refinanced its borrowings arrangements since the period end. The tables below set
out the Group's borrowings position as at 30 April 2017, which has been superseded as a result of the refinancing:
As at As at As at
30 April 30 April 31 October 2016
2017 2016
(unaudited) (unaudited) (audited)
Non-current £m £m £m
Borrowings:
Secured - bank loans 225.7 180.4 224.8
Secured - US Private placement notes 87.2 77.3 92.7
Debt issue costs (1.5) (2.0) (1.8)
311.4 255.7 315.7
The bank loan facility agreement expires in June 2020. The private placement notes have $65.6m (31 October 2016: $65.6m)
due for repayment in 2019 and $47.3m (31 October 2016: $47.3m) due for repayment in 2024.
The borrowings were secured by a fixed charge over the Group's investment property portfolio.
Borrowings are stated before unamortised issue costs of £1.5m (31 October 2016: £1.8m). The bank loans and private
placement notes were repayable as follows:
As at As at As at
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
£m £m £m
Between two and five years 276.4 225.3 278.7
After more than five years 36.5 32.4 38.8
Borrowings 312.9 257.7 317.5
Unamortised issue costs (1.5) (2.0) (1.8)
311.4 255.7 315.7
The effective interest rates at the balance sheet date were as follows:
As at As at As at
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
Bank loans Monthly LIBOR plus 1.50% Quarterly or monthly LIBOR plus 1.50% Quarterly or monthly LIBOR plus 1.50%
Bank loans Quarterly or monthly EURIBOR plus 1.50% Quarterly EURIBOR plus 1.50% Quarterly or monthly EURIBOR plus 1.50%
Private placement notes Weighted average rate of 6.21% Weighted average rate of 6.21% Weighted average rate of 6.21%
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at the period end in respect of which all
conditions precedent had been met at that date:
Floating rate
As at As at As at
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
£m £m £m
Expiring beyond one year 84.2 125.5 89.2
14 Financial instruments
IFRS 13 requires disclosure of fair value measurements by level of the following measurement hierarchy:
Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset of liability, either
directly or indirectly.
Level 3 - inputs for the asset of liability that are not based on observable market data.
The table below shows the level in the fair value hierarchy into which fair value measurements have been categorised:
As at As at As at
30 April 30 April 31 October 2016
2017 2016
(unaudited) (unaudited) (audited)
Assets per the balance sheet £m £m £m
Derivative financial instruments - Level 2 13.0 4.3 20.9
As at As at As at
30 April 30 April 31 October 2016
2017 2016
(unaudited) (unaudited) (audited)
Liabilities per the balance sheet £m £m £m
Derivative financial instruments - Level 2 3.1 2.4 3.4
The fair value of financial instruments that are not traded in an active market, such as over-the-counter derivatives, is
determined using valuation techniques. The Group obtains such valuations from counterparties who use a variety of
assumptions based on market conditions existing at each balance sheet date. The valuation techniques maximise the use of
observable market data where it is available and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the asset or liability is included in
level 3. The Group has no disclosable level 3 financial instruments.
There have been no transfers of assets or liabilities between levels of the fair value hierarchy.
15 Share capital
As at As at As at
30 April 30 April 31 October
2017 2016 2016
(unaudited) (unaudited) (audited)
Called up, issued and fully paid £m £m £m
209,306,201 (30 April 2016: 208,290,949) ordinary shares of 1p each 2.1 2.1 2.1
16 Capital commitments
The Group had capital commitments of £1.2m as at 30 April 2017 (April 2016: £18.7m).
17 Seasonality
Self-storage revenues are subject to seasonal fluctuations, with peak sales occurring in the second and third quarters of
the year. This is due to seasonal weather conditions and holiday periods leading to less demand for storage. For the six
months ended April 2016, on a like-for-like basis adjusting for the impact of changes to the Group's store portfolio, the
level of self-storage revenues represented 47.8% (April 2015: 48.1%) of the annual level of self-storage revenue in the
year ended 31 October 2016.
18 Post balance sheet events
On 19 May 2017, the Group announced the refinancing of its US Private Placement Notes ("USPP") and an amendment and
extension of its existing bank facilities to extend the average maturity and lower the cost of the Group's debt financing.
Further details are set out in the Financial Review section of this report.
Principal risks and uncertainties
The principal risks and uncertainties which could affect the Group for the remainder of the financial year are consistent
with those detailed on pages 15 and 16 of the Annual Report and Financial Statements for the year ended 31 October 2016, a
copy of which is available at www.safestore.com, and include:
· Strategy risk
· Finance risk
· Treasury risk
· Property investment and development risk
· Valuation risk
· Occupancy risk
· Real estate investment trust ("REIT") risk
· Catastrophic event risk
· Consequences of the UK's decision to leave the EU "Brexit"
The Company regularly assesses these risks together with the associated mitigating factors listed in the 2016 Annual
Report. The levels of activity in the Group's markets and the level of financial liquidity and flexibility continue to be
the areas designated as appropriate for added management focus.
We continue to believe that our market leading position in the UK and Paris, our strong brand and depth of management, as
well as our retail expertise and infrastructure, help mitigate the effects of fluctuations the economy or the housing
market. Furthermore, the UK self-storage market remains immature with little risk of supply outstripping demand in the
medium term.
Our prudent approach on new stores reduces our dependence on the number of non-trading investment properties in relation to
the established and mature stores that provide relatively stable and growing cash flow. The Board regularly reviews the
cash requirements of the business, including the covenant position although given the nature of the product, customer base
and lack of working capital requirements, liquidity is not considered to be a significant risk.
The Outlook section of this half yearly report provides a commentary concerning the remainder of the financial year.
Forward-looking statements
Certain statements in this interim results announcement are forward-looking statements. By their nature, forward-looking
statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements. These risks, uncertainties or assumptions
could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking
statements contained in this interim results announcement regarding past trends or activities should not be taken as a
representation that such trends or activities will continue in the future. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this interim results announcement. Except as required by
law, the Company is under no obligation to update or keep current the forward-looking statements contained in this interim
results announcement or to correct any inaccuracies which may become apparent in such forward-looking statements.
Statement of directors' responsibilities for the six months ended 30 April 2017
The directors confirm that, to the best of their knowledge, this condensed consolidated interim financial information has
been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a
fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
· an indication of important events that have occurred during the first six months of the financial year and their
impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related-party transactions in the first six months and any material changes in the related-party
transactions described in the last annual report.
The directors of Safestore Holdings plc are listed in the Safestore Holdings plc Annual Report for 31 October 2016. There
have been no changes of director since the Annual Report. A list of current directors is maintained on the Safestore
Holdings plc website, www.safestore.com.
The directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United
Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
By order of the Board
Frederic Vecchioli Andrew Jones
14 June 2017 14 June 2017
Chief Executive Officer Chief Financial Officer
INDEPENDENT REVIEW REPORT TO SAFESTORE HOLDINGS PLC
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 April 2017 which comprises the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated balance sheet, the condensed consolidated statement of changes in equity, the
consolidated cash flow statement and related notes 1 to 18. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland)
2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state
to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by
the European Union. The condensed set of financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European
Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 April 2017 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
London, United Kingdom
14 June 2017
This information is provided by RNS
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