REG - Safestore Hldgs plc - Preliminary Results <Origin Href="QuoteRef">SAFE.L</Origin> - Part 2
21/01/2016 07:10
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increased by £54.8m from £24.1m in 2014 to £78.9m in 2015, as well as adjustments for depreciation, contingent rent and
changes in the fair value of derivatives. The Group incurred no exceptional charges during the year (FY2014: £1.0m).
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.
2015 2014
UK Paris Total UK Paris Total
£'m £'m £'m £'m £'m £'m
Revenue 79.9 24.9 104.8 71.8 26.1 97.9
Underlying cost of sales (26.0) (4.7) (30.7) (24.4) (6.2) (30.6)
Gross profit 53.9 20.2 74.1 47.4 19.9 67.3
Gross margin 67% 81% 71% 66% 76% 69%
Underlying administrative expenses (13.3) (3.7) (17.0) (10.7) (3.6) (14.3)
Underlying EBITDA 40.6 16.5 57.1 36.7 16.3 53.0
EBITDA margin 51% 66% 54% 51% 62% 54%
Leasehold rent (5.1) (3.9) (9.0) (5.7) (4.6) (10.3)
Underlying EBITDA after leasehold rent 35.5 12.6 48.1 31.0 11.7 42.7
EBITDA after leasehold rent margin 44% 51% 46% 43% 45% 44%
Underlying EBITDA in the UK increased by £3.9m, or 10.6%, to £40.6m (FY2014: £36.7m), underpinned by an £8.1m increase in
revenue, which was driven primarily by a 6.7% increase in the average storage rate plus a 3.0% increase in closing
occupancy, despite the planned closures of Whitechapel and New Malden. UK costs increased by £4.2m, mainly as a result of
planned increased expenditure for store maintenance, employee incentives and enquiry generation. Underlying UK EBITDA after
leasehold rent increased by 14.5% to £35.5m (FY2014: £31.0m), reflecting savings in rent charges.
In the Parisian business, underlying EBITDA after leasehold rent increased by £0.9m or 7.7% to £12.6m (FY2014: £11.7m).
However, this performance was masked by the weakening of the Euro during the year. In local currency, underlying EBITDA in
Paris, before taking account of the Euro swap income of £0.9m (FY2014: £nil), grew by 6.0%, from E20.0m in 2014 to E21.2m
in 2015, despite the loss of revenue following the closure of St Denis Landy in October 2014. Underlying EBITDA after
leasehold rent increased by 11.2% to E15.9m (FY2014: E14.3m).
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 Paris.
The split of the Group's revenues by geographical segment is set out below for 2015 and 2014.
2015 % of total 2014 % of total % change
UK £'m 79.9 76% 71.8 73% 11.3%
Paris
Local currency E'm 33.7 32.1 5.0%
Average exchange rate E:£ 1.356 1.228
Paris in sterling £'m 24.9 24% 26.1 27% (4.6%)
Total revenue 104.8 100% 97.9 100% 7.0%
The Group's revenue increased by 7.0% or £6.9m in the year. The Group's occupied space was 122,000 sq ft higher at 31
October 2015 (3.58 million sq ft) than at 31 October 2014 (3.46 million sq ft), and the average rental rate per square foot
for the Group was 2.5% higher in 2015 at £24.85 than in 2014 (£24.24).
When the Group's revenue is adjusted for the closure of St Denis Landy in Paris in 2014, and the 2015 closures of New
Malden and Whitechapel in the UK, like-for-like revenue increased by 8.9%2. The increase in like-for-like revenue on a CER
basis1 was 11.5%, reflecting the weakening of the Euro during the year.
In the UK, revenue increased by £8.1m or 11.3%, and on a like-for-like basis it was up by 13.2%. The let sq ft was 76,000
sq ft higher at 31 October 2015 than at 31 October 2014, despite the planned closures of Whitechapel and New Malden which
had combined occupancy of 85,000 sq ft at October 2014, and the average rental rate was up 6.7% from £22.21 in 2014 to
£23.70 in 2015.
Revenue in the Parisian business increased by 5.0% on a constant currency basis. However, the weakening of the Euro during
the financial year had an adverse currency impact of approximately £2.5m on translation, which resulted in a 4.6% decrease
when reported in Sterling. Closing occupancy increased by 6.4% to 0.83 million sq ft, and the rental rate was E38.94 for
the year, an increase of 2.4% (FY2014: E38.01).
Analysis of Cost Base
Cost of sales
The table below details the key movements in cost of sales between 2014 and 2015.
Cost of sales 2015 2014
£'m £'m
Reported cost of sales (32.2) (32.3)
Adjusted for:
Depreciation 0.4 0.5
Contingent rent 1.1 1.2
Underlying cost of sales (30.7) (30.6)
Underlying cost of sales for 2014 (30.6)
Foreign exchange net of swap income 1.4
Store maintenance (0.5)
Store employee incentives (0.4)
Other volume related cost of sales (0.6)
Underlying cost of sales for 2015 (30.7)
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 Parisian cost of sales
of £0.5m, and the foreign currency swap generated income of £0.9m.
The Group's cost base has benefited from actions taken by management over the last two years to reduce costs. However, cost
increases were experienced during the year principally for sales volume related cost of sales, such as store maintenance,
employee incentives, merchandise and third party storage.
Administrative Expenses
The table below reconciles reported administrative expenses to underlying administrative expenses and details the key
movements in underlying administrative expenses between 2014 and 2015.
Administrative expenses 2015 2014
£'m £'m
Reported administrative expenses (17.3) (14.1)
Adjusted for:
Exceptional items - 1.0
Changes in fair value of derivatives 0.3 (1.2)
Underlying administrative expenses (17.0) (14.3)
Underlying administrative expenses for 2014 (14.3)
Foreign exchange 0.3
Employee remuneration (0.9)
Share-based payments (including national insurance) (0.2)
Enquiry generation (1.1)
Other costs (0.8)
Underlying administrative expenses for 2015 (17.0)
In order to arrive at underlying administrative expenses, adjustments are made to remove the impact of exceptional items
and changes in the fair value of derivatives.
Exceptional items in the prior year, costs principally associated with the restructuring of the Group's senior management
team, were not repeated during the current year.
Underlying administrative expenses increased by £2.7m to £17.0m (FY2014: £14.3m). The increase mostly arises in the UK,
and is primarily as a result of planned increased expenditure to generate customer enquiries (£1.1m) and a higher cost of
employee remuneration (£0.9m) to reflect the strong revenue and profit performance of the business during the year.
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.
2015 2014
£'m £'m
Revaluation of investment properties 83.1 29.3
Revaluation of investment properties under construction (0.1) (0.3)
Depreciation on leasehold properties (4.1) (4.9)
Gain on investment properties 78.9 24.1
The movement in investment properties principally 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 £66.7m to the positive valuation movement and the Paris business
contributed £16.3m, reflecting improving trading metrics in both businesses.
Operating Profit
Operating profit increased by £58.6m from £75.6m in 2014 to £134.2m in 2015. The increase predominantly reflects the £54.8m
increased gain on investment properties, as well as the £4.1m improvement in underlying EBITDA.
Net finance costs
Net finance costs includes interest payable, interest on obligations under finance leases, fair value movements on
derivatives and exchange gains or losses. Net finance costs reduced by £7.2m in 2015, to £16.0m from £23.2m in 2014.
2015 2014
£'m £'m
Net bank interest payable (11.4) (13.7)
Interest on obligations under finance leases (3.8) (4.2)
Fair value movement on derivatives (incl recycling of hedge reserve) 1.9 0.3
Net exchange losses (2.8) (3.7)
Unwinding of discount on CGS receivable 0.1 0.2
Exceptional finance expenses - (2.1)
Net finance costs (16.0) (23.2)
Underlying finance charge
The underlying finance charge (net bank interest payable) reduced by £2.3m to £11.4m, reflecting the annualisation of the
interest savings from the January 2014 capital restructuring, as well as further interest savings from the amendment and
extension undertaken in August 2015. Net bank interest payable also includes the amortisation of debt issue costs, which
has increased to £0.2m (FY2014: £0.1m), due to the £1.4m of additional debt issue costs incurred as a result of the August
2015 re-financing, which are being amortised over 5 years.
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 £126.0 £126.0 £90.0 71% 1.50% 1.45% 0.59% 2.70%
UK Revolver £80.0 £20.0 - - 1.50% - 0.51% 2.01%
UK Revolver- non-utilisation £60.0 - - - 0.60% - - 0.60%
Euro Revolver E70.0 £32.1 £21.4 67% 1.50% 0.31% (0.03%) 1.70%
Euro Revolver- non-utilisation E25.0 - - - 0.60% - - 0.60%
US Private Placement 2019 $65.6 £42.5 £42.5 100% 5.52% - - 5.83%
US Private Placement 2024 $47.3 £30.7 £30.7 100% 6.29% - - 6.74%
Unamortised finance costs - (£1.8) - - - - - -
Total £329.1 £249.5 £184.6 74% 3.90%
The UK term loan of £126m is fully drawn as at 31 October 2015 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%.
As at 31 October 2015, £20m of the £80m UK revolver and E45m (£32.1m) of the E70m Euro revolver was drawn. The drawn
amounts also attract a bank margin of 1.50%, and the Group pays a non-utilisation fee of 0.60% on the remaining undrawn
balances.
The Group has interest rate hedges in place to June 2020 swapping EURIBOR on E30m at an effective rate of 0.309%.
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 74% of the Group's drawn debt. Overall, the Group has an effective interest rate
on its borrowings of 3.90% at 31 October 2015, which has reduced from 4.34% since the previous year end, as a result of the
amendment and extension in August 2015.
Non-underlying finance charge
Interest on finance leases was £3.8m (FY2014: £4.2m) and reflects part of the leasehold rental charge. The balance of the
leasehold rental charge is expensed through the gain/loss on investment properties line and contingent rent in the income
statement. Overall, the leasehold rental charge for 2015 of £9.0m is £1.3m lower than the charge of £10.3m in 2014,
reflecting the benefit of rent reductions negotiated over the last few years as well as four fewer leasehold stores, due to
the freehold purchases of High Wycombe and St Denis, and the closure of New Malden during the year and St Denis Landy at
the end of the 2014 financial year.
The fair value movement on derivatives increased to a net gain of £1.9m in 2015 (FY2014: £0.3m), principally driven by
gains in the US dollar cross currency swaps as a result of the strengthening US dollar, partly offset by losses arising on
the interest rate swaps. Net exchange losses, arising mainly on US dollar denominated borrowings, decreased from £3.7m in
2014 to £2.8m in 2015.
The prior year included £2.1m of exceptional finance expenses arising on the capital restructuring in January 2014, which
were not repeated during 2015. As noted above, the debt issue costs of £1.4m incurred as a result of the amendment and
extension undertaken in August 2015 are being amortised over the period to June 2020, within the underlying finance
charge.
REIT Status
The Group converted to REIT status in 2013. Since then, the Group continues to benefit from a zero tax rate on its UK
self-storage income. The Group is normally 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, which in 2015 incurred a UK tax
charge of £0.2m.
The Group's Parisian business remains liable to tax on the profits from 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 charge for the year is analysed below:
Tax charge 2015 2014
£'m £'m
Underlying current tax (1.8) (1.2)
Tax relief on settlement of derivatives 0.2 0.3
Current tax (1.6) (0.9)
Underlying deferred tax (1.2) (2.1)
Tax on investment properties movement (6.3) (1.8)
Tax on exceptional finance costs - 0.2
Tax on revaluation of interest rate swaps (0.2) 0.3
Other (0.2) (1.3)
Deferred tax (7.9) (4.7)
Tax charge (9.5) (5.6)
The income tax charge in the year is £9.5m (FY2014: £5.6m). In the current year, the underlying current tax charge relating
to the Parisian business amounted to £1.6m (FY2014: £1.2m) and £0.2m (FY2014: £nil) related to the UK business. Underlying
deferred tax related to the Parisian business and amounted to a charge of £1.2m (FY2014: £2.1m).
The deferred tax impact of the gain on investment properties was a charge of £6.3m (FY2014: £1.8m) relating to the Parisian
business.
Profit after tax
As a result of the movements explained above, profit after tax for 2015 was £108.7m as compared with £46.8m in 2014. Basic
EPS was 52.4 pence (FY2014: 23.2 pence) and diluted EPS was 52.0 pence (FY2014: 23.0 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 9.65 pence is 29.5% up on the prior year dividend of 7.45 pence. The Property Income
Dividend ("PID") element of the full year dividend is 9.65 pence.
Shareholders will be asked to approve the final dividend of 6.65 pence (FY2014: 5.30 pence) at the Annual General Meeting
on 23 March 2016. If approved by Shareholders, the final dividend will be payable on 8 April 2016 to Shareholders on the
register at close of business on 11 March 2016.
Property Valuation
Cushman & Wakefield LLP has valued the Group's property portfolio. As at 31 October 2015, the total value of the Group's
portfolio was £775.5m (excluding investment properties under construction of £6.0m). This represents an increase of £71.5m
or 10.2% compared with the £704.0m valuation as at 31 October 2014. A reconciliation of the movement is set out below:
UK Paris Total Paris
£'m £'m £'m E'm
Value as at 1 November 2014 527.0 177.0 704.0 224.5
Currency translation movement - (17.4) (17.4) -
Additions 3.5 2.0 5.5 2.7
Disposals (1.5) - (1.5) -
Purchase of freehold 1.8 - 1.8 -
Revaluation 66.8 16.3 83.1 22.1
Value at 31 October 2015 597.6 177.9 775.5 249.3
The exchange rate at 31 October 2015 was E1.40:£1 compared to E1.27:£1 at 31 October 2014. This movement in the foreign
exchange rate has resulted in a £17.4m adverse currency translation movement in the year. This has impacted Group net asset
value ("NAV") but had no impact on the loan to value ("LTV") covenant as the assets in Paris are tested in Euros.
The value of the UK property portfolio has increased by £70.6m compared with 31 October 2014, comprising a £66.8m valuation
gain and capital additions of £5.3m, which includes the purchase of the freehold of our High Wycombe store for £1.8m, less
£1.5m for the disposal of our leasehold interest at New Malden.
The Company's pipeline of expansion stores in the UK is valued at £6.0m as at 31 October 2015, a £0.7m increase on the 2014
valuation of £5.3m.
In Paris, the value of the property portfolio increased by E24.8m, of which E22.1m was valuation gain and capital additions
were E2.7m. However, the net gain in Sterling was only £0.9m, due to the foreign exchange impact described above.
The Group's freehold exit yield for the valuation at 31 October 2015 reduced to 7.18% from 7.73% at 31 October 2014, and
the weighted average annual discount rate for the whole portfolio has reduced from 11.82% at 31 October 2014 to 10.79% at
31 October 2015.
The adjusted EPRA NAV per share was 256.4 pence at 31 October 2015, up 17.7% on 31 October 2014, reflecting an £82.6m
increase in reported net assets during the year.
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 £282.8m at 31 October 2015, a reduction of £17.5m from the 2014
position of £300.3m. Total capital (net debt plus equity) increased from £708.3m at 31 October 2014 to £773.4m at 31
October 2015. The net impact is that the gearing ratio has reduced from 42% to 37% 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 2015 the Group LTV ratio was 32% as compared to 37% at 31 October 2014. This reduction in
LTV has arisen principally due to the £72.2m increase in value of the Group's investment property portfolio, along with a
£15.1m reduction in gross debt, principally due to loan repayments totalling £13.0m.
In August 2015, the Group's bank loan facilities were amended and extended. The UK term loan facility was reduced by £30m
from £156m to £126m, whilst the £50m UK revolver increased by £30m to £80m, resulting in no net change in the amount of our
facilities, yet providing greater flexibility to our borrowing arrangements at the same time. Both the UK and Euro
facilities were extended by a further two years from June 2018 to June 2020. The interest margin payable reduced by 0.75%
from 2.25% to 1.50% over LIBOR, whilst the non-utilisation rate on the undrawn facilities reduced from 1.0% to 0.6%. In
addition, £30m of mandatory repayments of £5m every 6 months previously required under the facilities, which were due to
start on 31 October 2015 through to 30 April 2018, were removed.
During the year, the Group has made loan repayments totalling £13.0m out of cash resources, to reduce the amount drawn
under the UK revolver by £10m from £30m, following the re-financing, to £20m at 31 October 2015 and to reduce the amount
drawn under the Euro revolver by E4m (£3m) to E45m.
Of the US Private Placement debt which totals $113m issued in 2012, $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.
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 increased to a level of
EBITDA:interest of 2.2:1 in July 2015, and in July 2016 this will increase to 2.4:1 where it will remain until the end of
the facilities. Interest cover for the year ended 31 October 2015 is 4.2:1.
The UK LTV covenant reduced from 62.5% to 60.0% in April 2015, where it will remain until the end of the facilities, and
the French LTV covenant remains at 60% throughout the life of the facility. As at 31 October 2015, there is significant
headroom in both the UK LTV and the French LTV covenant calculations.
The Group is in compliance with its covenants at 31 October 2015 and, based on forecast projections, is expected to be in
compliance for a period in excess of twelve months from the date of this report.
Cash flow
The table below sets out the cash flow of the business in 2015 and 2014.
2015 2014
£'m £'m
Underlying EBITDA 57.1 53.0
Working capital/exceptionals/other 1.8 0.8
Operating cash inflow 58.9 53.8
Interest payments (12.0) (15.1)
Leasehold rent payments (9.0) (10.3)
Tax payments (0.6) (1.9)
Free cash flow (before investing and financing activities) 37.3 26.5
Capital expenditure - investment properties (5.7) (3.3)
Capital expenditure - purchase of freehold (1.8) (2.9)
Capital expenditure - property, plant and equipment (0.5) (0.2)
Capital Goods Scheme receipt 1.6 1.8
Proceeds from disposal - investment properties 1.5 41.6
Net inflow after investing activities 32.4 63.5
Dividends paid (17.2) (12.5)
Issue of share capital - 31.8
Net repayment of borrowings (13.0) (75.3)
Debt issuance costs (1.4) (2.1)
Hedge breakage costs (2.0) (4.9)
Net (decrease)/increase in cash (1.2) 0.5
Operating cash flow increased by £5.1m in the year, primarily due to the £4.1m improvement in underlying EBITDA. The
movement in working capital, exceptional costs and other in the year primarily reflects an adjustment for the non-cash
impact of share-based payment charges of £1.0m (FY2014: £1.0m) and the lack of exceptional charges in 2015 (FY2014:
£1.0m).
Free cash flow (before investing and financing activities) grew by 41% to £37.3m (FY2014: £26.5m). In addition to increased
operating cash flow, the growth in free cash flow resulted from a £3.1m reduction in interest payments, primarily
reflecting the benefits of the capital restructuring undertaken in January 2014, and lower leasehold rent and tax
payments.
Net investing activities experienced an outflow of £4.9m (FY2014: £37.0m inflow), which included the purchase of the High
Wycombe freehold for £1.8m and proceeds of £1.5m for the disposal of our leasehold interest at New Malden, whereas the
prior year benefitted from the receipt of the sale proceeds of the Whitechapel property less the purchase of the St Denis
freehold.
Financing activities generated a net cash outflow of £33.6m (FY2014: £63.0m), including dividend payments totalling £17.2m
(FY2014: £12.5m) and the repayment of £13.0m (FY2014: £75.3m) of borrowings. In addition, debt issuance and hedge breakage
costs totalling £3.4m (FY2014: £7.0m) were incurred as a result of the re-financing undertaken during the year. No cash
was generated from the issue of share capital during the year (FY2014: £31.8m).
Andy Jones
20 January 2016
Consolidated income statement
for the year ended 31 October 2015
Notes Group
2015£'m 2014£'m
Revenue 2 104.8 97.9
Cost of sales (32.2) (32.3)
Gross profit 72.6 65.6
Administrative expenses (17.3) (14.1)
Underlying EBITDA (operating profit before exceptional items, change in fair value of derivatives, gain/loss on investment properties, contingent rent and depreciation) 57.1 53.0
Exceptional items 4 - (1.0)
Change in fair value of derivatives (0.3) 1.2
Depreciation and contingent rent (1.5) (1.7)
Operating profit before gain on investment properties 55.3 51.5
Gain on investment properties 8 78.9 24.1
Operating profit 2 134.2 75.6
Finance income 3 3.2 4.7
Finance expense 3 (19.2) (27.9)
Profit before income tax 118.2 52.4
Income tax charge 5 (9.5) (5.6)
Profit for the year 108.7 46.8
Earnings per share for profit attributable to the equity holders
- basic (pence) 7 52.4 23.2
- diluted (pence) 7 52.0 23.0
The financial results for both years relate to continuing activities.
Consolidated statement of comprehensive income
for the year ended 31 October 2015
Group
2015£'m 2014£'m
Profit for the year 108.7 46.8
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges - (3.3)
Recycling of hedge reserve - 6.7
Currency translation differences (9.9) (8.4)
Other comprehensive expenditure, net of tax (9.9) (5.0)
Total comprehensive income for the year 98.8 41.8
Consolidated balance sheet
as at 31 October 2015
Notes Group
2015£'m 2014£'m
Assets
Non-current assets
Investment properties 8 775.5 704.0
Interests in leasehold properties 8 47.1 51.0
Investment properties under construction 8 6.0 5.3
Property, plant and equipment 1.6 1.5
Derivative financial instruments 11 0.6 -
Deferred income tax assets 0.1 2.0
Other receivables 3.4 4.8
834.3 768.6
Current assets
Inventories 0.2 0.2
Trade and other receivables 19.4 20.2
Current income tax assets - 0.2
Derivative financial instruments 11 - 0.3
Cash and cash equivalents 15 13.8 15.3
33.4 36.2
Total assets 867.7 804.8
Current liabilities
Financial liabilities
- bank borrowings 10 - (5.0)
Trade and other payables (36.5) (36.7)
Current income tax liabilities (0.7) -
Obligations under finance leases 12 (7.2) (8.0)
(44.4) (49.7)
Non-current liabilities
Financial liabilities
- bank borrowings 10 (249.5) (259.6)
- derivative financial instruments 11 (1.4) (4.8)
Deferred income tax liabilities (41.9) (39.7)
Obligations under finance leases 12 (39.9) (43.0)
(332.7) (347.1)
Total liabilities (377.1) (396.8)
Net assets 490.6 408.0
Equity
Ordinary shares 13 2.1 2.1
Share premium 60.0 60.0
Other reserves (12.8) (2.9)
Retained earnings 441.3 348.8
Total equity 490.6 408.0
Consolidated statement of changes in shareholders' equity
for the year ended 31 October 2015
Group
Sharecapital£'m Sharepremium£'m Translationreserve£'m Hedgereserve£'m Retainedearnings£'m Total£'m
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 1 November 2014 2.1 60.0 (2.9) - 348.8 408.0
Comprehensive income
Profit for the year - - - - 108.7 108.7
Other comprehensive income
Currency translation differences - - (9.9) - - (9.9)
Total other comprehensive income - - (9.9) - - (9.9)
Total comprehensive income - - (9.9) - 108.7 98.8
Transactions with owners
Dividends (note 6) - - - - (17.2) (17.2)
Employee share options - - - - 1.0 1.0
Transactions with owners - - - - (16.2) (16.2)
Balance at 31 October 2015 2.1 60.0 (12.8) - 441.3 490.6
Consolidated cash flow statement
for the year ended 31 October 2015
Notes Group
2015£'m 2014£'m
Cash flows from operating activities
Cash generated from operations 14 57.8 52.6
Interest paid (15.8) (19.4)
Interest received - 0.1
Tax paid (0.6) (1.9)
Net cash inflow from operating activities 41.4 31.4
Cash flows from investing activities
Expenditure on investment properties and development properties (7.5) (6.2)
Proceeds in respect of Capital Goods Scheme 1.6 1.8
Purchase of property, plant and equipment (0.5) (0.3)
Proceeds from disposal of investment properties 1.5 41.6
Proceeds from sale of property, plant and equipment - 0.1
Net cash (outflow)/inflow from investing activities (4.9) 37.0
Cash flows from financing activities
Issue of share capital - 31.8
Equity dividends paid 6 (17.2) (12.5)
Proceeds from borrowings - 6.8
Debt issuance costs (1.4) (2.1)
Hedge breakage payments (2.0) (4.9)
Finance lease principal payments (4.1) (4.9)
Repayment of borrowings (13.0) (82.1)
Net cash outflow from financing activities (37.7) (67.9)
Net (decrease)/increase in cash and cash equivalents (1.2) 0.5
Exchange loss on cash and cash equivalents (0.3) (1.0)
Cash and cash equivalents at 1 November 15.3 15.8
Cash and cash equivalents at 31 October 15 13.8 15.3
1. Summary of significant 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 20 January 2016.
The financial information included in this preliminary announcement does not constitute the Group's statutory accounts for
the years ended 31 October 2014 or 31 October 2015. Statutory accounts for the year ended 31 October 2014 have been
delivered to the Registrar of Companies. The statutory accounts for the year ended 31 October 2015 will be delivered to the
Registrar of Companies following the Company's annual general meeting.
The auditor has reported on the 2015 and 2014 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 2015 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 2014. 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"), IFRIC interpretations and those parts of the Companies Act 2006 applicable to
companies reporting under IFRS.
The Directors of Safestore have assessed the viability of the Group over a three year period to October 2018 and are
confident that, on the basis of current financial projections and facilities available, it is appropriate to prepare the
preliminary results on a going concern basis.
The following new standards, amendments to existing standards and interpretations issued by the International Accounting
Standards Board have been endorsed by the EU and have been implemented by the Group for the year ended 31 October 2015:
· IFRS 10 'Consolidated Financial Statements';
· IFRS 11 'Joint Arrangements';
· IFRS 12 'Disclosures of Interests in Other Entities';
· IAS 19 'Employee Benefits' - Amendments relating to employee contributions to defined benefit plans;
· IAS 27 'Separate Financial Statements';
· IAS 28 'Investments in Associates and Joint Ventures';
· IAS 32 'Financial Instruments: Presentation' - Amendments relating to the offsetting of financial assets and financial liabilities;
· IAS 36 'Impairment of Assets' - Amendments arising from recoverable amount disclosure for non-financial assets;
· IAS 39 'Financial Instruments: Recognition and Measurement' - Amendments relating to novation of derivatives and continuation of hedge accounting;
· IFRIC 21 'Levies';
· Annual improvements to IFRSs 2010-2012 Cycle; and
· Annual improvements to IFRSs 2011-2013 Cycle.
The adoption of these new standards, amendments to existing standards and interpretations has not led to any significant
changes in accounting policies, or had a material impact on the Group's accounts.
The following new standards, amendments to existing standards and interpretations issued by the International Accounting
Standards Board have not been applied in preparing these consolidated financial statements, as their effective dates fall
in periods beginning after 1 November 2015. The Group has no plan to adopt these standards earlier than the effective
date:
Effective for the year ending 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 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 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;
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; and
· IFRS 15 'Revenue from Contracts with Customers'.
The Directors are currently considering the potential impact arising from the future adoption of these standards and
interpretations listed above.
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
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