REG - Safestore Hldgs plc - Preliminary Results <Origin Href="QuoteRef">SAFE.L</Origin> - Part 2
28/01/2015 02:06
- Part 2: For the preceding part double click ID:nRSV8130Ca
EBITDA Margin 51% 62% 54% 50% 62% 53%
EBITDA in the UK increased by £1.9m or 5.5% to £36.7m (2013: £34.8m), underpinned by a £1.6m increase in revenue, driven
primarily by a 4.7% increase in closing occupancy, together with a £0.3m saving in costs.
In the Parisian business, EBITDA increased by £0.3m or 1.9% to £16.3m (2013: £16.0m), driven by administrative expense
savings of £0.7m. On a constant currency basis, EBITDA in France grew by 5.6%.
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 2014 and 2013.
2014 % of total 2013 % of total % change
UK £'m 71.8 73% 70.2 73% 2.3%
France
Local currency E'm 32.1 30.7 4.4%
Average Exchange Rate E:£ 1.228 1.185
France in sterling £'m 26.1 27% 25.9 27% 0.8%
Total Revenue 97.9 100% 96.1 100% 1.9%
The Group's revenue increased by 1.9% or £1.8m in the year. The Group's occupied space was 145,000 sq ft higher at 31
October 2014 (3.46 million sq ft) than at 31 October 2013 (3.32 million sq ft). However, the average rental rate for the
Group was 0.6% lower in 2014 at £24.24 than in 2013 (£24.39).
When the Group's revenue is adjusted for the closure of the Enfield South store in H2 2013 and for the loss of tenancy
income subsequent to the sale of the Whitechapel store in November 2013, like-for-like revenue increased by 3.4%2. The
increase in like-for-like revenue on a CER basis1 was 4.4%, reflecting the weakening of the Euro during the year.
In the UK, revenue increased by £1.6m or 2.3%, and on a like-for-like basis it was up by 4.4%. The let sq ft was 125,000 sq
ft higher at 31 October 2014 than at 31 October 2013, with the average rental rate increasing marginally from £22.19 in
2013 to £22.21 in 2014.
Revenue in the Parisian business increased by 4.4% on a constant currency basis. However, the weakening of the Euro during
the financial year had an adverse currency impact of approximately £0.9m on translation, so the increase was only £0.2m, or
0.8%, when reported in Sterling. Closing occupancy increased by 2.6% to 0.78 million sq ft, and the rental rate was E38.01
for the year, an increase of 1.4% on 2013 (E37.49).
Analysis of Cost Base
Cost of sales
The table below details the key movements in cost of sales between 2013 and 2014.
Cost of sales Period
2014 2013
(£'m) (£'m)
Reported Cost of Sales (32.3) (31.8)
Adjusted For:
Depreciation 0.5 0.4
Contingent Rent 1.2 0.7
Underlying Cost of Sales (30.6) (30.7)
Underlying cost of sales for 2013 (30.7)
Foreign exchange (including currency swaps) 0.2
Nanterre insurance proceeds (received in FY13) (0.8)
Rates and facilities savings 0.4
Other cost improvements 0.3
Underlying Cost of Sales for 2014 (30.6)
In order to arrive at underlying cost of sales, adjustments are made to remove the impact of depreciation and contingent
rent.
The weakening of the Euro during the year resulted in a decrease in the sterling equivalent of the French cost of sales of
£0.2m.
During the year ended 31 December 2013, £0.8m was credited to cost of sales, in respect of insurance proceeds relating to
the fire that destroyed the Nanterre store and Head Office in December 2010, which was not repeated in the current year.
Management have taken a number of actions to reduce the cost base which, during the year, included rates appeals and
greater focus on store facilities costs, which generated £0.4m of savings. In addition, a reduction in other costs of £0.3m
resulted largely from these actions.
Administrative Expenses
The table below reconciles reported administrative expenses to underlying administrative expenses and details the key
movements in underlying administrative expenses between 2013 and 2014.
Administrative Expenses Period
2014 2013
(£'m) (£'m)
Reported Administrative Expenses (14.1) (16.6)
Adjusted For:
Exceptional Items 1.0 0.7
Changes in Fair Value of Derivatives (1.2) 1.3
Underlying Administrative Expenses (14.3) (14.6)
Underlying Administrative Expenses for 2013 (14.6)
Foreign exchange 0.1
Share based payments (including national insurance) (1.1)
Employee and related cost savings 0.7
Professional and adviser fees 0.4
Other cost improvements 0.2
Underlying Administrative Expenses for 2014 (14.3)
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 period are costs principally associated with the restructuring of the Group's senior management
team and certain operational functions during the year.
Underlying administrative expenses were reduced by £0.3m to £14.3m (2013: £14.6m).
The weakening of the Euro during the year resulted in a £0.1m decrease in the sterling equivalent of French administrative
expenses.
Charges for share based payments increased to £1.1m, due to improved performance against targets. This increase was offset
by savings in employee costs, reflecting headcount reductions and lower advisers' fees totalling £1.1m, and other cost
savings which amounted to £0.2m.
Gain on Investment Properties
The gain on investment properties consists of the revaluation gains and losses with respect to investment properties under
IAS 40 and finance lease depreciation for the interests in leaseholds and other items as detailed below.
2014 2013
£'m £'m
Movement on Investment Properties 29.0 26.0
Depreciation on Leasehold Properties (4.9) (4.5)
Gain on Investment Properties 24.1 21.5
The movement in investment properties reflects the combination of yield movements within the valuations together with the
impact of changes in the cash flow metrics of each store. In a normal year the key variables are rate per sq ft, stabilised
occupancy, number of months to reach stabilised occupancy and the yields applied.
In the current financial year the UK business contributed £23.7m to the positive valuation movement and the French business
contributed £5.3m, reflecting improving trading metrics.
Operating Profit
Operating profit increased by £6.4m from £69.2m in 2013 to £75.6m in 2014. The increase predominantly reflects the £2.2m
increase in underlying EBITDA, a swing in the fair value of the forward currency contracts of £2.5m from a loss of £1.3m in
2013 to a gain of £1.2m in 2014, and a £2.6m increase in the gain on investment properties from £21.5m in 2013 to £24.1m in
2014.
Net finance costs
Net finance costs consist of interest receivable on bank deposits, interest payable and interest on obligations under
finance leases.
2014 2013
£'m £'m
Net bank interest payable (13.7) (18.4)
Interest on obligations under finance leases (4.2) (5.0)
Fair value movement on derivatives (incl recycling of hedge reserve) 0.3 2.8
Net exchange losses (3.7) -
Exceptional finance expenses (2.1) -
Unwinding of discount on CGS receivable 0.2 -
Net Finance Costs (23.2) (20.6)
Net finance costs increased by £2.6m in 2014, to £23.2m from £20.6m in 2013. However 2014 saw a £4.7m decrease in the
underlying finance charge (net bank interest payable), following the capital restructuring in January 2014, and a £0.8m
saving in finance lease interest. These savings were offset by increases in non-underlying finance charges, primarily a
£2.5m adverse swing in the fair value movements on derivatives (which includes the recycling of fair value movements
previously reported in the hedge reserve), £3.7m of net exchange losses (predominantly following the cessation of hedge
accounting) and £2.1m of exceptional finance expenses arising on the capital restructuring.
Based on the year-end drawn debt position 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% 0.56% 3.36%
UK Revolver £50.0 - - - 2.25% - 0.56% 2.81%
UK Revolver- non-utilisation £50.0 - - - 1.01% - - 1.01%
Euro Revolver E70.0 £38.6 £35.5 92% 2.25% 0.81% 0.21% 3.01%
Euro Revolver- non-utilisation E21.0 - - - 1.01% - - 1.01%
US Private Placement 2019 $65.6 £41.0 £41.0 100% 5.52% - - 5.83%
US Private Placement 2024 $47.3 £29.6 £29.6 100% 6.29% - - 6.74%
Unamortised Finance Costs (US PP) - (£0.6) - - - - - -
Total £331.8 £264.6 £186.1 70% 4.34%
The UK term loan of £156m is fully drawn as at 31 October 2014 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%.
As at 31 October 2014, the UK revolver of £50m was undrawn. The Group pays a non-utilisation fee of 1.0125% on undrawn
balances.
The Euro revolver of E70m has E49m (£38.6m) drawn as at 31 October 2014 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%.
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 70% of the Group's drawn debt. Net interest payable includes a net gain in respect
of the fair value movement on derivatives (including the recycling of fair value movements previously reported in the hedge
reserve) of £0.3m (2013: gain of £2.8m).
Overall, the Group has an effective interest rate on its borrowings of 4.34% at 31 October 2014, which has reduced from
5.26% since the previous year end, as a result of the capital restructuring in January 2014.
Interest on finance leases was £4.2m (2013: £5.0m) and reflects part of the leasehold rental payment. The balance is
charged through the gain/loss on investment properties line and contingent rent in the income statement. Overall, the
leasehold rent charge for 2014 of £10.3m is broadly flat compared to £10.2m in 2013, with the benefit of the 2013
negotiated rent reductions being offset by increased contingent rent.
REIT Status
The Group converted to REIT status on 1 April 2013. Since then, the Group continues to benefit from a zero tax rate on its
UK self-storage income. The Group is only liable to UK tax on the profits attributable to the residual business consisting
of the sale of ancillary products such as insurance and packaging products.
The Group's French business remains liable to tax on its self-storage and ancillary businesses as it is not entitled to
relief under UK REIT rules as its business does not relate to UK property income.
Tax
The tax credit for the year is analysed below:
Tax (charge)/credit 2014 2013
£'m £'m
Underlying Current Tax (1.2) (0.9)
Tax relief on settlement of derivatives 0.3 -
Current tax (0.9) (0.9)
Exceptional deferred Tax Credit - 63.2
Underlying Deferred Tax (2.1) (2.2)
Tax on Investment Properties Movement (1.8) (1.9)
Tax on exceptional finance costs 0.2 -
Tax on revaluation of Interest Rate swaps 0.3 -
Other (1.3) 1.7
Deferred tax (4.7) 60.8
Tax (charge)/credit (5.6) 59.9
The income tax charge in the year is £5.6m (2013: £59.9m credit). The prior year income tax credit was driven by a deferred
tax credit of £63.2m arising from the release of the UK deferred tax provision following the REIT conversion in April 2013,
so has not been repeated in the current year.
In the current year, the underlying current tax charge all relates to the French business and amounted to £1.2 million
(2013: £0.9m). Underlying deferred tax related to the French business and amounted to a charge of £2.1m (2013: £2.2m).
The tax impact of the gain on investment properties was a charge of £1.8m (2013: £1.9m), and tax credits of £0.2m and £0.3m
were recognised on exceptional finance costs and the valuation of interest rates swaps in France respectively.
Profit after tax
The profit after tax for 2014 was £46.8m as compared with £108.5m in 2013, principally due to the exceptional UK deferred
tax credit of £63.2m in 2013 not repeating. Basic EPS was 23.2 pence (2013: 57.8 pence) and diluted EPS was 23.0 pence
(2013: 57.3 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 Group's full year dividend of 7.45 pence is 29.6% up on the prior year dividend of 5.75 pence. The Property Income
Dividend ("PID") element of the full year dividend is 4.80 pence.
Shareholders will be asked to approve the final dividend of 5.30 pence (2013: 3.90 pence) at the Annual General Meeting on
19 March 2015. If approved by Shareholders, the final dividend will be payable on 8 April 2015 to Shareholders on the
register at close of business on 13 March 2015.
Property Valuation
Cushman & Wakefield LLP has valued the Group's property portfolio. As at 31 October 2014, the total value of the Group's
portfolio was £704.0m (excluding investment properties under construction of £5.3m). This represents a decrease of £20.6m
or 2.8% compared with the £724.6m valuation as at 31 October 2013. A reconciliation of the movement is set out below:
UK France Total France
£'m £'m £'m E'm
Value as at 1 November 2013 542.2 182.4 724.6 213.0
Currency translation movement - (14.6) (14.6) -
Additions 2.4 1.0 3.4 1.3
Disposals (41.6) - (41.6) -
Purchase of freehold - 2.9 2.9 3.6
Revaluation 24.0 5.3 29.3 6.6
Value at 31 October 2014 527.0 177.0 704.0 224.5
The exchange rate at 31 October 2014 was E1.27:£1 compared to E1.17:£1 at 31 October 2013. This movement in the foreign
exchange rate has resulted in a £14.6m adverse currency translation movement in the year. This has impacted the net asset
value ("NAV") but had no impact on the Loan to Value ("LTV") covenant as the assets in Paris are tested in Euro.
The value of the UK property portfolio has reduced by £15.2m compared with 31 October 2013. A £24.0m gain arose on the 31
October 2014 revaluation of the UK portfolio, due to improving trading metrics and performance; however, the £41.6m
disposals of the Whitechapel store and the vacant former Southend site during the year resulted in the net reduction in
value.
In France, the freehold of the Group's existing St Denis store in Paris was acquired for E3.6m. The French property
valuation increased by E6.6m in the year reflecting improving operating metrics in the business.
The Group's freehold exit yield for the valuation at 31 October 2014 was 7.73%, unchanged from 31 October 2013.
The weighted average annual discount rate for the whole portfolio has reduced slightly from 11.91% at 31 October 2013 to
11.82% at 31 October 2014.
The Company's pipeline of expansion stores is valued at £5.3m as at 31 October 2014, a £0.3m decrease on the 2013 valuation
of £5.6m.
The adjusted EPRA NAV per share was 217.9 pence at 31 October 2014, up 3.6% on 31 October 2013, with the benefit of a
£62.1m increase in net assets being partly offset by the additional shares in issue following the placing of 18.6 million
shares in February 2014.
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 £300.3m at 31 October 2014, a reduction of £82.5m from the 2013
position of £382.8m. Total Capital (net debt plus equity) reduced from £728.7m at 31 October 2013 to £708.3m at 31 October
2014. The net impact is that the gearing ratio has moved from 53% to 42% in the year.
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 31 October 2014 the Group LTV ratio was 37% as compared to 47% at 31 October 2013. Management considers
that a Group LTV of c.40% represents an appropriate medium-term capital structure objective.
The reduction in Group LTV since 31 October 2013 was principally a result of the above reduction in net debt. During the
year the Group sold its Whitechapel property for net proceeds of £40.5m. At the 31 October 2013 year end, the Whitechapel
property had been valued within investment properties at £40.5m. The Group used the disposal proceeds to pay down debt
under the existing UK Term Facility.
Following the de-leveraging described above, the Group extended its existing bank facilities from June 2016 to June 2018.
As a result, the £230m UK Term Loan facility was reduced to £181.2m, and the UK revolver was increased to £50m, which was
undrawn as at 31 October 2014. The Euro revolver remains at E70m, of which E49m had been drawn as at 31 October 2014, and
the US Private Placement reduced from $115m to $113m.
As a result of the bank refinancing, the margin ratchet was reduced by 0.25% to a range of 2.25% to 3.25%, based on the
interest cover ratio. The initial margin payable following the refinancing was 2.75%, compared with the margin paid through
most of 2013 of 3.25%, and by the year end this had reduced further to 2.25%. 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.
Subsequent to the bank refinancing, the Group raised net proceeds of £31.6m by way of a successful share placing. £25.2m of
these proceeds were used to reduce the UK Term Loan further, to £156m.
The UK bank facilities and the US Private Placement share interest cover and LTV covenants. As part of the amendment and
extension of the bank facilities the Interest Cover requirement commences 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 French LTV covenant remains at 60% throughout the life of the facility and the UK LTV covenant reduces from
62.5% to 60.0% in April 2015 where it remains until the end of the facilities.
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.
Future Liquidity and Capital Resources
Borrowings under the existing bank facilities are subject to certain financial covenants and the Group is in compliance
with its covenants at 31 October 2014 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 2014 and 2013.
2014 2013
(£'m) (£'m)
Underlying EBITDA 53.0 50.8
Working Capital/ Exceptionals/ Other 0.8 1.5
Operating Cash inflow 53.8 52.3
Capital Expenditure- investment properties (3.3) (4.7)
Capital Expenditure- purchase of freehold (2.9) -
Capital Expenditure- property, plant and equipment (0.2) (0.2)
Capital Goods Scheme Receipt 1.8 3.1
Proceeds from disposal- investment properties 41.6 -
Net inflow from Investing Activities 37.0 (1.8)
Interest Payments (15.1) (17.5)
Leasehold Rent Payments (10.3) (10.2)
Tax Payments (1.9) (0.1)
Free Cash flow (before Dividends and Financing Activities) 63.5 22.7
Dividends Paid (12.5) (10.6)
Issue of Share Capital 31.8 -
Net repayment of Borrowings (75.3) (3.4)
Debt Issuance Costs (2.1) -
Hedge breakage costs (4.9) -
Net Cash flow from Financing Activities (63.0) (14.0)
Net increase in cash 0.5 8.7
Operating cash flow increased by £1.5m in the year, primarily due to the £2.2m improvement in underlying EBITDA. The
movement in working capital, exceptional costs and other in the year primarily reflects adjustments to accruals (for
example relating to rent reviews) and the impact of the movement in exchange rates.
The £37.0m cash inflow from investing activities predominantly reflects the receipt of sales proceeds totalling £41.6m from
the Whitechapel store and the vacant former Southend site. No new stores were opened in the period, however, the Group
acquired the freehold of its existing St Denis store in Paris for E3.6m. In addition the Group received £1.8m (2013: £3.1m)
under the Capital Goods Scheme.
Interest payments have reduced by £2.4m to £15.1m (2013: £17.5m) following the capital restructuring in January 2014.
As a result of the above, free cash flow increased from £22.7m in 2013 to £63.5m in 2014.
There were significant movements in cash flows from financing activities in the period, including the net repayment of
borrowings of £75.3m (2013: £3.4m) and costs relating to refinancing and replacement of hedging instruments of £7.0m (2013:
£nil), along with dividend payments totalling £12.5m (2013: £10.6m), which were funded by a combination of the above free
cash flow and issues of share capital totalling £31.8m (primarily the January 2014 share placing, which generated net
proceeds of £31.6m).
Andy Jones
21 January 2015
Consolidated income statement
for the year ended 31 October 2014
Notes Group
2014 £'m 2013£'m
Revenue 2 97.9 96.1
Cost of sales (32.3) (31.8)
Gross profit 65.6 64.3
Administrative expenses (14.1) (16.6)
Underlying EBITDA (operating profit before exceptional items, change in fair value of derivatives, gain/loss on investment properties, contingent rent and depreciation) 53.0 50.8
Exceptional items 4 (1.0) (0.7)
Change in fair value of derivatives 1.2 (1.3)
Depreciation and contingent rent (1.7) (1.1)
Operating profit before gain on investment properties 51.5 47.7
Gain on investment properties 8 24.1 21.5
Operating profit 2 75.6 69.2
Finance income 3 4.7 2.8
Finance expense 3 (27.9) (23.4)
Profit before income tax 52.4 48.6
Income tax (charge)/credit* 5 (5.6) 59.9
Profit for the year 46.8 108.5
Earnings per share for profit attributable to the equity holders
- basic (pence) 7 23.2 57.8
- diluted (pence) 7 23.0 57.3
* Includes an exceptional credit of £nil (FY2013: £63.2m) (see note 5).
The financial results for both years relate to continuing activities.
Consolidated statement of comprehensive income
for the year ended 31 October 2014
Group
2014 £'m 2013£'m
Profit for the year 46.8 108.5
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges (3.3) -
Recycling of hedge reserve 6.7 (0.5)
Currency translation differences (8.4) 6.0
Tax on items taken to other comprehensive income - (1.1)
Other comprehensive (expenditure)/income, net of tax (5.0) 4.4
Total comprehensive income for the year 41.8 112.9
Consolidated balance sheet
as at 31 October 2014
Notes Group
2014 £'m 2013£'m
Assets
Non-current assets
Investment properties 8 704.0 724.6
Interests in leasehold properties 8 51.0 55.7
Investment properties under construction 8 5.3 5.6
Property, plant and equipment 1.5 1.8
Deferred income tax assets 2.0 3.3
Other receivables 4.8 6.4
768.6 797.4
Current assets
Inventories 0.2 0.1
Trade and other receivables 20.2 17.1
Current income tax assets 0.2 -
Derivative financial instruments 11 0.3 -
Cash and cash equivalents 15 15.3 15.8
36.2 33.0
Total assets 804.8 830.4
Current liabilities
Financial liabilities
- bank borrowings 10 (5.0) (5.0)
- derivative financial instruments 11 - (0.4)
Trade and other payables (36.7) (34.8)
Current income tax liabilities - (0.8)
Obligations under finance leases 12 (8.0) (8.6)
(49.7) (49.6)
Non-current liabilities
Financial liabilities
- bank borrowings 10 (259.6) (337.9)
- derivative financial instruments 11 (4.8) (10.6)
Deferred income tax liabilities (39.7) (39.3)
Obligations under finance leases 12 (43.0) (47.1)
(347.1) (434.9)
Total liabilities (396.8) (484.5)
Net assets 408.0 345.9
Equity
Ordinary shares 13 2.1 1.9
Share premium 60.0 28.4
Other reserves (2.9) 2.1
Retained earnings 348.8 313.5
Total equity 408.0 345.9
Consolidated statement of changes in shareholders' equity
for the year ended 31 October 2014
Group
Sharecapital£'m Sharepremium£'m Translationreserve£'m Hedgereserve£'m Retainedearnings£'m Total£'m
Balance at 1 November 2012 1.9 28.3 (0.5) (1.8) 215.4 243.3
Comprehensive income
Profit for the year - - - - 108.5 108.5
Other comprehensive income
Currency translation differences - - 6.0 - - 6.0
Recycling of hedge reserve - - - (0.5) - (0.5)
Tax on items taken to other comprehensive income - - - (1.1) - (1.1)
Total other comprehensive income - - 6.0 (1.6) - 4.4
Total comprehensive income - - 6.0 (1.6) 108.5 112.9
Transactions with owners
Dividends (note 6) - - - - (10.6) (10.6)
Increase in share capital - 0.1 - - - 0.1
Employee share options - - - - 0.2 0.2
Transactions with owners - 0.1 - - (10.4) (10.3)
Balance at 1 November 2013 1.9 28.4 5.5 (3.4) 313.5 345.9
Comprehensive income
Profit for the year - - - - 46.8 46.8
Other comprehensive income
Currency translation differences - - (8.4) - - (8.4)
Change in fair value of hedged instruments - - - (3.3) - (3.3)
Recycling of hedge reserve - - - 6.7 - 6.7
Total other comprehensive income - - (8.4) 3.4 - (5.0)
Total comprehensive income - - (8.4) 3.4 46.8 41.8
Transactions with owners
Dividends (note 6) - - - - (12.5) (12.5)
Increase in share capital 0.2 31.6 - - - 31.8
Employee share options - - - - 1.0 1.0
Transactions with owners 0.2 31.6 - - (11.5) 20.3
Balance at 31 October 2014 2.1 60.0 (2.9) - 348.8 408.0
Consolidated cash flow statement
for the year ended 31 October 2014
Notes Group
2014 £'m 2013£'m
Cash flows from operating activities
Cash generated from operations 14 52.6 51.6
Interest paid (19.4) (22.5)
Interest received 0.1 -
Tax paid (1.9) (0.1)
Net cash inflow from operating activities 31.4 29.0
Cash flows from investing activities
Expenditure on investment properties and development properties (6.2) (4.7)
Proceeds in respect of Capital Goods Scheme 1.8 3.1
Purchase of property, plant and equipment (0.3) (0.2)
Proceeds from disposal of investment properties 41.6 -
Proceeds from sale of property, plant and equipment 0.1 -
Net cash inflow/(outflow) from investing activities 37.0 (1.8)
Cash flows from financing activities
Issue of share capital 31.8 -
Equity dividends paid 6 (12.5) (10.6)
Proceeds from borrowings 6.8 2.9
Debt issuance costs (2.1) -
Hedge breakage payments (4.9) -
Finance lease principal payments (4.9) (4.5)
Repayment of borrowings (82.1) (6.3)
Net cash outflow from financing activities (67.9) (18.5)
Net increase in cash and cash equivalents 0.5 8.7
Exchange (loss)/gain on cash and cash equivalents (1.0) 0.2
Cash and cash equivalents at 1 November 15.8 6.9
Cash and cash equivalents at 31 October 15 15.3 15.8
1. Accounting policies
The principal accounting policies of the Group are set out below. These policies have been consistently applied to each of
the years presented, unless otherwise stated.
Basis of preparation
The Board approved this preliminary announcement on 21 January 2015.
The financial information included in this preliminary announcement does not constitute the Group's statutory accounts for
the years ended 31 October 2013 or 31 October 2014. Statutory accounts for the year ended 31 October 2013 have been
delivered to the Registrar of Companies. The statutory accounts for the year ended 31 October 2014 will be delivered to the
Registrar of Companies following the Company's annual general meeting.
The auditors have reported on the 2014 and 2013 accounts; their report was unqualified, did not include any references to
any matters by way of emphasis and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
These financial statements for the year ended 31 October 2014 have been prepared under the historical cost convention
except for the following assets and liabilities which are stated at their fair value; investment property, derivative
financial instruments and financial interest in property assets. The accounting policies used are consistent with those
contained in the Group's last annual report and accounts for the year ended 31 October 2013. All amounts are presented in £
sterling and are rounded to the nearest £0.1m, unless otherwise stated.
The financial information included in this preliminary announcement has been prepared in accordance with EU endorsed
International Financial Standards ("IFRS"), International Financial Report Interpretations Committee ("IFRIC")
interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The preliminary results have been prepared on a going concern basis. The Directors of Safestore are confident that, on the
basis of current financial projections and facilities available and after considering sensitivities, the Group has
sufficient resources for its operational needs and to enable the Group to remain in compliance with the financial covenants
in its bank facilities for at least the next twelve months.
The following interpretations and amendments were endorsed by the EU and are mandatory for the Group for the first time for
the financial year beginning 1 November 2013. There are no new standards, amendments or interpretations that are effective
for the first time for the current financial year that have had a material impact on the Group.
i) New and amended standards
· IFRS 13 'Fair Value Measurement' provides consistency by making available a single source of guidance on how fair
value is measured. IFRS 13 is applied when fair value measurements or disclosures are required or permitted by other IFRSs.
The application of IFRS 13 has not materially impacted the fair value measurements carried out by the Group. IFRS 13 also
requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards,
including IFRS 7 'Financial Instruments: Disclosures'.
ii) New and amended standards not yet effective
At the date of authorisation of these financial statements, there were a number of new standards, amendments to existing
standards and interpretations in issue that have not been applied in preparing these consolidated financial statements. The
Group has no plan to adopt these standards earlier than the effective date.
Effective for the year ending 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.
Effective for the year ending 31 October 2017:
· IFRS 14 Regulatory Deferral Accounts;
· IFRS 10 and IAS 28 Amendments relating to the Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture;
· IFRS 11 Amendments relating to Acquisitions of Interests in Joint Operations;
· IAS 16 and IAS 38 Amendments relating to Clarification of Acceptable Methods of Depreciation and
Amortisation;
· IAS 27 Amendments relating to Equity Method in Separate Financial Statements; and
· Annual Improvements to IFRSs 2012-2014 Cycle.
Effective for the year ending 31 October 2018:
· IFRS 15 Revenue from Contracts with Customers.
Effective for the year ending 31 October 2019:
· IFRS 9 Financial Instruments - final standard, addressing the accounting for financial assets and
liabilities including classification and measurement, impairment, hedge accounting and own credit.
The Directors are currently considering the potential impact arising from the future adoption of these standards and
interpretations listed above.
Group risk factors
As with all businesses, the Group is affected by certain risks, not wholly within our control, which could have a material
impact on the Group and could cause actual results to differ materially from forecast and historical results. The most
significant of these, all of which are macro-economic, are as follows:
· Long term flat or negative growth in value of group assets
· Lack of readily available funding to either the Group or third parties
· Unfavourable legislation and increased burden from regulatory environment
The principal risks and uncertainties facing the Group are set out in the Risk Management report of the 2014 Annual Report
and Accounts.
Forward-looking statements
Certain statements in this preliminary announcement are forward-looking. Although the Group believes that the expectations
reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove
to have been correct.
Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements whether as
a result of new information, future events or otherwise.
2. Segmental analysis
The segmental information presented has been prepared in accordance with the requirements of IFRS 8. The Group's revenue,
profit before income tax and net assets are attributable to one activity: the provision of self-storage accommodation and
related services. Segmental information is presented in respect of the Group's geographical segments. This is based on the
Group's management and internal reporting structure.
Safestore is organised and managed in two operating segments, based on geographical areas, being the United Kingdom and
France.
The chief operating decision maker, being the Executive Directors, identified in accordance with the requirements of IFRS
8, assesses the performance of the operating segments on the basis of adjusted EBITDA.
The operating profits and assets include items directly attributable to a segment as well as those that can be allocated on
a reasonable basis:
Year ended 31 October 2014 UK£'m France£'m Group£'m
Continuing operations
Revenue 71.8 26.1 97.9
EBITDA before exceptional items, change in fair values of derivatives, gain on investment properties, depreciation and
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