Preliminary Results

RNS Number : 8421Y

Safestore Holdings plc

30 January 2014

Safestore Holdings plc

Preliminary Results for the year ended 31 October 2013

Improved capital structure, well positioned for earnings growth

Key measures

	Year Ended 31 October 2013	Year Ended 31 October 2012	Change
Underlying and Operating Metrics
Revenue	£96.1m	£98.8m	(2.7%)
Underlying EBITDA¹	£50.8m	£50.3m	+1.0%
Cash Tax adjusted Earnings per Share²	11.12p	10.56p	+5.3%
Dividend per Share	5.75p	5.65p	+1.8%
Free Cash flow (before dividends and financing)	£22.7m	£4.7m	+383%
Closing Occupancy⁶	65.3%	63.8%	+1.5 ppts
RevPAF³	£18.72	£19.41	(3.6%)

Statutory Metrics
Profit/ (loss) before tax	£48.6m	(£19.5m)	n/a
Basic Earnings/(loss) per Share	57.8p	(4.2p)	n/a

Highlights

Resilient Financial Performance

· UK demand remains robust with Gross Transaction Value⁵ up 8.4%

· Strong French performance growing occupancy, rate and revenue

· Impact of VAT imposition mitigated with Underlying EBITDA up 1%

· Positive occupancy momentum achieved in Q4 2013 continues in new financial year⁹ with net new lets up 7.9% and Group revenue broadly flat.

Operational Delivery

· Strategic progress driving enquiry growth in all markets

· National Accounts UK business customers square foot up +31%

· Ongoing focus on asset management with profitable sale of Whitechapel site

Strong and Flexible Balance Sheet

· Conversion to REIT status completed

· Maturity of bank debt extended by two years to June 2018 at reduced margin

· Placing of up to 18,594,987 shares announced today

· Group LTV¹⁰ lowered to c.40% (proforma) and full year finance costs reduced by c.£4 million⁸ per annum (proforma)

Frederic Vecchioli, Safestore's Chief Executive Officer, commented:

"I am pleased to report an underlying EBITDA marginally ahead of last year which is, I believe, a creditable performance in the context of the imposition of 20% VAT in October 2012 and the associated impact on our UK revenues. I believe this once again illustrates the resilient nature of our Self-Storage business.

"I am also able to announce the rebalancing of the capital structure of the Group. With the Group LTV set to reduce to c.40% after the placing, Safestore now has the financial flexibility and funding capacity to realise its strategic growth priorities.

"Going forward we will have a renewed focus on operational delivery to improve occupancy and thereby Group performance. Safestore has a strong presence in its key markets and a fully invested portfolio with capacity to fill. With the imposition of VAT in the UK now behind us and with an improving economic climate, I am confident that, after the strategic investment of the last two years, our operational focus and leaner cost base leave us well positioned to realise the significant opportunities ahead."

Notes

1 - Underlying EBITDA is defined as Operating Profit before exceptional items, change in fair value of derivatives, gain/loss on investment properties and contingent rent

2 - Cash tax adjusted earnings per share is defined as Profit or Loss for the year before exceptional items, change in fair value of derivatives, gain/loss on investment properties and the associated tax impacts exceptional tax items and deferred tax charges

3 - RevPAF (revenue per average square foot) is calculated as Total Revenue divided by total MLA

4 - MLA is Maximum Lettable Area- following a recent review of MLA across the estate and adjusting for the closure of Enfield South, Group MLA has been adjusted to 5.08 million sq ft

5 - Gross transaction value is revenue plus the associated VAT

6 - Closing occupancy excludes offices but includes 76,600 sq ft of bulk tenancy as at 31 October 2013 (31 October 2012 -79,100 sq ft)

7 - before costs associated with the transaction of £0.6 million

8 - based on current levels and rates of hedging. Hedging arrangements for new facilities to be confirmed by 31 March 2014

9 - two months to 31 December 2013

10 - Loan to Value - gross debt (excluding finance leases) as a proportion of the valuation of investment properties and properties under construction

Summary

Safestore has delivered a resilient performance in the first full accounting period following the UK government's imposition of VAT on the self-storage industry from 1 October 2012. As expected, Group revenue was down 2.7% on last year's record levels with an 8.4% improvement in French revenues, driven by both improved occupancy and storage rate growth, partially offsetting a 6.2% reduction in the UK.

We have made strong progress with our strategic initiatives, including leveraging the size of our leading UK Self Storage business to drive enquiry growth of 33% in the last three years through more efficient marketing investments and a leading online presence which generates 81% of the enquiries.

Our UK Gross Transaction value growth of 8.4% has been boosted through the growing performance of our call centre and our National Accounts sales team.

As a result, Group underlying EBITDA, at £50.8 million, is marginally ahead of last year despite the lower levels of revenue. Cash tax adjusted EPS was up 5.3% in the period at 11.12p (2012: 10.56p) driven by the resilient EBITDA performance and lower underlying interest costs.

Our property portfolio valuation increased by £39.7 million since 31 October 2012 at £730.2 million with the UK portfolio up £21.7 million at £547.8 million bolstered by the sale of our Whitechapel site for proceeds of £41.1m⁷, £14.6 million above book value. Our French portfolio was up €8.9 million to €213 million.

During the period we successfully completed the conversion of the Group to a UK Real Estate Investment Trust ("REIT") which has resulted in the removal of our UK corporation tax liability on UK property rental income and the elimination of substantial deferred tax liabilities from the balance sheet.

The Board has recommended a final dividend of 3.90p per share (2012: 3.80p) resulting in a full year dividend of 5.75p per share (2012: 5.65p).

Outlook

Whilst it is early in the new financial year, the positive trading momentum seen in Q4 is continuing in all our markets with net new lets and reservations up on the comparable period last year. As this momentum continues to build, and, with our operational focus, we anticipate a return to improving rates.

With the operational leverage in the business and an ongoing focus on tight cost control, combined with an improving economic outlook, a leading presence in key markets and a rebalanced capital structure, Safestore is well positioned to make further progress against its business objectives in 2014 and beyond.

For further information, please contact:

Safestore Holdings PLC

Frederic Vecchioli, Chief Executive Officer	Tel: 020 7457 2020 on Thursday 30 January and thereafter on 0208 732 1544
Andy Jones, Chief Financial Officer

www.safestore.co.uk

College Hill

Matthew Smallwood/ Mark Reed

Tel: 020 7457 2020

A presentation for analysts will be held at 9.30am today at:

Investec Bank plc, 2 Gresham Street, London, EC2V 7QP

For dial-in details of the presentation please contact:

Alys Twinley (alys.twinley@collegehill.com or telephone on Tel: 020 7457 2020).

Notes to Editors

·	Safestore is the UK's largest self-storage group with 134 stores. They include 97 wholly owned stores in the UK including 58 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool and Bristol, together with 12 Space Maker stores under management in the UK and 25 wholly owned stores in the Paris region. Safestore was founded in the UK in 1998. It acquired the French business "Une Pièce en Plus" in 2004 which was founded in 1998 by the current Safestore Group CEO Frederic Vecchioli. Safestore has been listed in the London Stock exchange since 2007.
·	The Group provides storage to almost 46,000 personal and business customers.
·	Safestore (excluding Space Maker) has a maximum lettable area ("MLA") of 5.1 million sq ft (excluding the expansion pipeline stores) of which 3.32 million sq ft is currently occupied.
·	Safestore employs around 550 people in the UK and France

Chairman's Statement

I am delighted to take over as Chairman of Safestore at what I believe is a pivotal point in the development of the business. The year ended 31 October 2013 was a year of consolidation as the business faced the impact of the UK government's imposition of 20% VAT on self-storage. I am pleased to report that the Company showed great resilience during this period as is evidenced by the 8.4% year-on-year increase in Gross Transaction Values in the UK demonstrating customer ongoing demand for self-storage. I believe that the Group has emerged from this period stronger, energised and well positioned to realise the significant opportunities ahead.

Financial Results

Revenue for the year was £96.1 million, 2.7% behind last year (FY2012: £98.8 million). The reduction in revenue arose in the UK where the impact of the imposition of VAT resulted in a fall in revenues of £4.7 million, marginally better than our June 2012 guidance of a £5-6 million revenue reduction. The strong performance of Une Pièce en Plus, our French business, partially offset the UK revenue reduction.

Underlying EBITDA increased by 1% to £50.8 million (FY2012: £50.3 million). The reduction in UK revenue was offset by significant cost savings and the strength of the French business allowing us to maintain EBITDA despite pressure on the top line.

Capital Structure

Since the Interim results in June we have reviewed the capital structure of the Group, concluding that the existing structure could be improved in terms of both the cost of funding and financial flexibility.

Over the last six months we have completed a number of measures to rebalance the Capital Structure of the Group including a £50 million reduction in our debt following the disposal of the Whitechapel site, which completed in November 2013, and we have today announced the placing of up to 18,594,987 new ordinary shares, the proceeds of which will be used to further pay down debt. In conjunction with this de-leveraging we have renegotiated our banking arrangements extending our debt maturity a further two years (to June 2018) and reducing the bank margins payable.

As a result of these measures our Group Loan To Value ("Group LTV") ratio will reduce from c.50% to c.40%. This represents a level of gearing we feel is appropriate to enable the Group to increase returns on equity, maintain financial flexibility and to achieve our medium term strategic objectives.

Conversion to REIT

The conversion to REIT status was completed on 1 April 2013. The Group will now benefit from an exemption from UK corporation tax on its UK property rental income and gains from its qualifying property portfolio.

Dividend

The Board is pleased to recommend a final dividend of 3.90 pence per share bringing the total dividend to 5.75 pence per share for the year. This total dividend for the year is covered just under 2.0 times by cash tax earnings.

The Board remains confident in the prospects for the Group and, after a year of consolidation, plans a progressive dividend policy in 2014 and beyond. For the current financial year and for the medium term, the Board is comfortable with dividend cover of between 1.7 and 2.0 times. Given the Group's REIT status, it is required to pay out 90% of its UK based property income in dividends. The Group estimates that the aforementioned range of dividend cover will ensure compliance with REIT requirements.

People

During the year we announced the appointment of Frederic Vecchioli as Chief Executive with effect from 4 September 2013. Frederic succeeded Peter Gowers, who left the Group this year after two and a half years as Chief Executive. Frederic was the founder and President of Une Pièce en Plus, our French business, and has 15 years of self-storage experience. He has served on the Board of Safestore since 2011.

In May 2013 Andy Jones succeeded Richard Hodsden as Chief Financial Officer.

Andy brings a valuable understanding of similar customer focused and yield managed operational businesses from his previous role at Worldpay Limited and his earlier career at TUI Travel plc and Virgin. We are very pleased to welcome Andy to Safestore.

Ian Krieger, formerly a senior partner and vice-chairman at Deloitte, joined the Board during October 2013. Ian is currently a non-executive director and Chairman of the Audit Committee of Premier Foods plc and will succeed Adrian Martin as Safestore's Audit Committee Chairman around the time of the Company's AGM on 19 March 2014. Adrian continues in his role as senior independent director.

Finally, I would like to thank my predecessor, Richard Grainger, who has decided to step down from the Chairman's role after five and a half years with the Company. I'd like to thank Richard for his significant contribution as Chairman of Safestore and wish him well for the future.

During the year, our people continued to be the key drivers of the success of the business. I would like to take this opportunity to thank all my colleagues throughout the business for their hard work and dedication this year.

Alan Lewis

29 January 2014

Chief Executive's Statement

I am excited to take over the Chief Executive role at a significant point in the Group's development. I believe the Group has the asset base, the management expertise and the infrastructure to exploit the improving industry and macro- economic backdrop and I look forward to realising the opportunities ahead with the execution of our strategy.

Since taking up the role of CEO in September 2013, I have identified three phases to our future strategy:

· Establish a more appropriate capital structure for the business

· Operational delivery

· Selective portfolio management opportunities

Capital Structure

Our key focus over the last six months has been to establish an appropriate capital structure for the business. We believe that a Group LTV of c.40% is an appropriate medium term level for the business. As at 31 October 2013 our Group LTV was 47%. Since then we have taken the following actions to improve the position:

· Sold our Whitechapel site for £41.1 million and used the proceeds to pay down debt.

· Paid down a further £9 million of debt from underlying cash flows

· Announced an Amendment and Extension of our bank facilities which provides us with lower interest margins, a further two year term to our bank facilities whilst at the same time allowing the group to enjoy improved covenants

· Placing of up to 18,594,987 new shares announced today the proceeds of which will be used to pay down debt

On completion of all the above management initiatives, we will have a rebalanced capital structure which will improve return on equity, provide financial flexibility and allow us to achieve our medium term strategic objectives.

Operational Delivery

Our main focus over the coming year will be to improve the operational performance of the existing business.

We have a strong portfolio in both the UK and France. Of our 122 stores, 83 are in London and the South East of England or in Paris and 39 are in the UK regions. We operate more stores inside the M25 than any other competitor.

We will continue to ensure that our Head Office functions remain lean and efficient and focused on supporting the operational performance of the business. Our customer support centre is now established and handles 18% of all customer enquiries and is responsible for 21% of new let space. Our National Accounts team is ensuring that this part of our business continues to grow and now represents 10% of UK occupied space. Our pricing team ensures we continue to offer innovative promotions and that we yield manage effectively.

However, we have 1.5 million sq ft of unoccupied space in our UK stores and 0.3 million sq ft in Paris. Our immediate focus will be on ensuring that we drive occupancy to utilise this capacity at carefully managed rates.

In order to achieve this in the UK we have recently implemented the following changes:

· Reorganised the regional structure of the business and recruited an additional two regional managers to ensure a closer focus on management of store performance.

· Invested in store training to ensure that the stores' sales and customer service skills are strengthened.

· Reorganised the store incentive programme. All members of staff are now incentivised on a monthly scheme that is focused on locally controllable measures such as revenue generation, net new let performance and selling prices achieved.

We aim to continually seek to drive operational excellence at the store level to maximise the conversion of leads, occupancy and revenue.

Inevitably, these changes will take some time to become established but our medium term aim is to organically grow occupancy in the existing store portfolio and to demonstrate the positive effect on profitability of the operating leverage in our business.

Selective portfolio management opportunities

In parallel to realising the near term opportunity from occupancy growth, the rebalancing of the capital structure provides the financing to realise a small number of demonstrably value creating investments from within the current estate, as well as lay the foundations for longer term growth. To realise these near term opportunities from within the estate we anticipate a maximum capital expenditure of £10-£15 million over the next two years over and above our normalised annual capital expenditure.

The growth opportunities from the existing estate will remain the Group's primary focus. As we realise the organic growth opportunity we will consider further selective and disciplined investment in our portfolio.

In Paris, we continue to assess opportunities to create value from our store portfolio and, in 2014, we plan to expand and purchase the freehold of our leasehold St Denis store.

In addition, we will continue to seek other asset management opportunities in our store portfolio. Further lease re-gearing and income generation opportunities will be explored on an ongoing basis.

Our approach to store development in the future will be pragmatic, flexible and focused on return on equity.

We believe that this strategy, combined with positive market and economic dynamics and the quality of our property portfolio, means that we are well positioned to deliver strong returns to our shareholders.

Strategic Progress

Marketing focused on improving web offering

Over the last few years we have moved away from buying web market share through display advertisements that create high website traffic but low conversion as we believe that self-storage is not an impulse purchase. Our experience is that customers requiring storage now predominantly conduct detailed online research in their area to assess all the options available to them. It is therefore important to appear on the top rankings in each location for each keyword of which there are close to 95,000 search entry combinations. Safestore's scale has allowed the funding and development of a skilled team who ensure that the business achieves a leading search engine presence. Online enquiries now represent 81% of our enquiries and 31% of our online enquiries originate from our refreshed mobile site, a figure which has more than doubled in the last 12 months.

As we move forward, we will continue to focus on the efficiency of our pay-per-click expenditure in order to achieve an optimal return on our annual search engine expenditure. Such initiatives will enable us to continue to improve our website enquiry capture which has grown by 18% over the last financial year.

We have integrated Feefo (an independent merchant review system) into our website which allows customers to leave their feedback on the quality of our customer service on the site. Our customer satisfaction score is currently in excess of 97%. Our focus on social media has increased resulting in a significant presence on Facebook and Twitter. In addition we have branched out into other social media channels such as Pintrest, You Tube, Instagram, Flickr and Google+.

Increasingly Efficient and Innovative Store Operations

The introduction of VAT on self-storage in the UK presented numerous challenges for the business. The management of pricing during this period was critical and our central pricing team, which we strengthened during the year, played a particularly important role. Our new pricing platform was also used to trial a number of innovative promotions.

A number of training and performance management initiatives were launched during the year to build the selling and customer service capabilities of our teams. We now have call recording technology in all our stores providing regional management with a tool to enable more effective coaching of store teams. Our new performance management framework increases the focus on individuals' contributions to the results of the business.

We remain focused on business as well as domestic customers. Our national network means that we are particularly well placed to further grow the business customer market and in particular National Accounts. Business customers in the UK now constitute 54% of our total space let and have an average length of stay of 29.5 months. Within our Business customer category, our centrally managed National Accounts business continues to flourish with revenue increasing by 29% during the year. The space let to National Accounts customers has increased by 31% during the year and at 255k sq ft constitutes 10% of our total occupied space in the UK business. Two thirds of the space occupied by National Accounts Customers is outside London, evidence of the importance of a national estate.

Value Creation from Pro-active Asset Management

Efficient and effective management of our property portfolio has always been a key priority. During the year we extended leases on a number of our leasehold properties including New Malden, Hanworth, Oldbury, Stevenage, Staples Corner, Bristol Ashton Gate, providing the business with long term tenure on these properties. Together with the permanent planning consent we obtained on our Notting Hill site this activity added in excess of £9 million to our asset valuation. We also closed our Enfield South leasehold store, consolidating its operations successfully into our freehold Enfield North and New Southgate stores.

Most significant, however, was the disposal of our Whitechapel site in November 2013. We completed the sale to London and Quadrant ("L&Q"), on an unconditional basis, for £41.1 million. This represented a premium of £14.6 million over the April 2013 book value of £26.5 million.

As part of the terms of the sale, Safestore will continue to operate its self-storage business from the site until November 2015 under a leaseback from L&Q at a peppercorn rent and thus benefit from the self-storage income generated during that period from the site. During the leaseback period we intend to seek alternative premises which, together with our other sites in London, would provide our customers with suitable alternative storage arrangements. L&Q plan to develop the site for primarily residential purposes.

The sale of Whitechapel is part of the wider rebalancing of the capital structure of the Group, and is in-line with the Group's active asset management strategy.

We believe that the Whitechapel disposal further underpins the valuation of our overall estate and we will continue to assess opportunities to enhance asset value. In the coming year our team will seek further opportunities to regear leases and release development value. In addition we will continue to assess the potential development of our sites at Chiswick, Birmingham and Wandsworth.

Portfolio Summary

The self-storage market has been growing in the last 10 years across many European countries but few regions offer the unique characteristic of London and Paris, both of which consist of large, wealthy and densely populated markets. In the London region, the population is 13 million inhabitants with a density of 5,200 inhabitants per square mile in the region, 11,000 per square mile in the city of London and up to 32,000 in the densest boroughs. The population of the Paris Urban area is of 10.7 million inhabitants with a density of 9,300 inhabitants per square mile in the urban area but 54,000 per square mile in the City of Paris and first belt - where 76% of our French stores are located - which has one of the highest densities in the western world. 85% of the Paris region population lives in the city core versus the rest of the urban area. This percentage is 60% in the London region. There are currently 202 storage centres within the M25 versus only 85 in the Paris urban area. The GDP generated in the London and Paris conurbation are roughly equivalent and is more than twice that of any other European equivalent.

In addition, barriers to entry in these two city markets are high, due to land values and limited availability as well as planning regulation. This is particularly the case for Paris and its first belt, which limits further development possibilities.

We have a strong position in both the UK and Paris markets operating 97 stores in the UK, 58 of which are in London and the South East, and 25 stores in Paris.


Owned Store Portfolio by Region	London &	Rest of	UK	Paris	Group
	South East	UK	Total		Total

Number of Stores	58	39	97	25	122

Let Sq ft (m sq ft)	1.45	1.10	2.55	0.76	3.31
Maximum Lettable Area (m sq ft)	2.18	1.84	4.02	1.06	5.08

Average Let Sq ft per store (k sq ft)	25	28	26	30	27
Average Store Capacity (k sq ft)	38	47	41	42	42

Closing Occupancy %	66.5%	59.9%	63.5%	71.9%	65.3%

Average Rate (£ per sq ft)	26.40	16.64	22.19	31.63	24.39
Revenue (£'m)	47.7	22.5	70.2	25.9	96.1
Average Revenue per Store (£'m)	0.82	0.58	0.72	1.04	0.79

In the UK, 68% of our revenue is generated by our stores in London and the South East. On average, our stores in London and the South East are smaller than in the rest of the UK but the occupancy levels and rental rate achieved are higher. In London we operate 43 stores within the M25, more than any other competitor.

In France, we have a leading position in the heart of the affluent City of Paris market with 8 stores branded as Une Pièce en Plus ("A spare room") with more than twice the number of stores of our two major competitors combined. 76% of the UPP stores are located in a cluster within a 5 mile radius of the city centre, which provide strong operational and marketing synergies as well as options to differentiate and channel customers to the right store subject to their preference for convenience or price affordability. The Parisian market has attractive socio-demographic characteristics for self-storage and we believe that UPP enjoys unique strategic strength in such an attractive market.

Together, London, the South-East and Paris represent 68% of our owned stores, 76% of our revenues, as well as 58% of our available additional capacity.

Additionally, Safestore has the benefit of a leading national presence in the UK regions where the stores are predominantly located in the centre of key metropolitan areas such as Birmingham, Manchester, Liverpool, Bristol, Glasgow and Edinburgh.

In the UK we own three development sites with planning permission at Chiswick and Wandsworth in London and in central Birmingham. We continue to assess the value of these sites for self-storage and alternative purposes.

Market

The self-storage market in the UK and France is relatively immature compared to geographies such as the USA and Australia. In the UK, self-storage capacity is 0.5 sq ft per head of population as compared with 7.4 sq ft in the USA and 1.1 sq ft in Australia. While there has been a significant capacity increase in the pre-2008 years which has helped raise awareness of what is still a relatively new industry, the addition of new supply has been fairly limited since 2008.

In the Paris market, we estimate the density to be even lower at around 0.36 sq ft per inhabitant.

New supply in prime locations is likely to be limited in our two markets in the short term as a result of planning restrictions and availability of suitable land.

Increasing consumer awareness of self-storage, combined with limited supply of new capacity and improving economic conditions result in attractive industry conditions.

The supply in the UK market is relatively fragmented. Safestore is the leader by number of stores with 97 wholly-owned sites, followed by Big Yellow with 54 wholly-owned stores, Access with 53 stores, Shurgard with 22 stores and Lok'n Store with 21 stores. Altogether, the five leading brands accounts for less than 31% of the UK store portfolio. The remaining c.600 self-storage outlets are independently owned in small chains or single units.

The Paris market is significantly more concentrated with three main operators. Our French Business, Une Pièce-en-Plus is mainly present in the core wealthier and more densely populated inner Paris and first belt areas, whereas our two main competitors have a greater presence in the outskirts and second belt of Paris.

There are numerous drivers of self-storage growth. Most private or business customers need storage either temporarily or permanently for different reasons at any point in the economic cycle, resulting in a market depth that is in our view the reason for its exceptional resilience. The growth of the market is driven both by the fluctuation of economic conditions, which has an impact on the mix of demand, and by growing awareness of the product.

Our domestic customers' need for storage is often driven by lifestyle events such as births, marriages, bereavements, divorces or by the housing market including house moves and developments and moves between rental properties.

Our business customer base includes a range of businesses from start-up online retailers through to multi-national corporates utilising our national coverage to store in multiple locations while maintaining flexibility in their cost base.


Business and Personal Customers		UK	France

Personal Customers
	Numbers (% of total)	70%	80%
	Sq ft occupied (% of total)	46%	62%
	Average Length of Stay (months)	21.1	25.7

Business Customers
	Numbers (% of total)	30%	20%
	Sq ft occupied (% of total)	54%	38%
	Average Length of Stay (months)	29.5	30.7

Business Model

Customer enquiries are received through a variety of channels including the Internet, telephone and 'walk-ins'. In the early days of the industry, local directories and store visibility were the key drivers of enquiries. The Internet is now by far the most dominant channel, accounting for 81% of our enquiries in the UK and 58% in France. Telephone enquiries comprise 11% of the total (30% in France) and 'Walk-ins' amount to only 8% (12% in France). This key change is a clear benefit to the leading operators that possess the budget and the management skills necessary to generate a commanding presence in the major search engines. Safestore has developed a leading digital marketing platform that has generated a 33% enquiry growth over the last three years.

Our enquiries are predominantly handled directly by the stores and, in the UK, we have a Customer Support Centre ("CSC") which now handles 18% of all enquiries, in particular when the store staff are busy handling calls or outside normal store opening hours.

Our pricing platform provides the store and CSC staff with system-generated real time prices managed by our centrally based yield management team. Local staff has certain levels of discretion to flex the system generated prices but this is continually monitored.

The key drivers of sales success are the capacity to generate enquiries in a digital world, the capacity to provide a great number of storage locations that are conveniently located close to the customers' requirements and the ability to maintain a consistent high quality, motivated retail team that is able to close customer sales at an appropriate storage rate, all of which can be better provided by larger, more efficient organisations.

The cost base of the business is relatively fixed. Each store typically employs three staff. Our Group Head Office comprises business support functions such as Yield Management, Property, Marketing, HR, IT and Finance.

At 31 October 2013 we have 1.5 million sq ft of unoccupied space in the UK and 0.3 million sq ft in France, equivalent to over 40 new stores. Our absolute focus is on filling the spare capacity in our stores at optimally yield-managed prices. The operational leverage of our business model will ensure that the bulk of the incremental revenue converts to profit given the fixed nature of our cost base.

Trading Performance

UK - a resilient performance

2012/13 has been impacted by the UK Government's imposition of VAT on self-storage from 1 October 2012. Over the year, gross transaction value on self-storage revenues (including the 20% VAT element) was up 8.4% on the previous year, demonstrating the continuing resilience of the business model. However, after taking into account the VAT payable, total revenue for the UK was down 6.2% or £4.7 million at £70.2 million (2012: £74.9 million) for the full year. This performance is marginally better than our initial guidance, provided in June 2012, for a £5-6 million full year reduction in revenue arising from the imposition of VAT.

Our UK business (owned stores) ended the year at closing occupancy of 2.55 million sq ft or 63.5% of our Maximum Lettable Area ("MLA") ⁴ which represented an increase on 2012 of 17,000 sq ft. During the year, our leasehold Enfield South store was closed and consolidated into our freehold Enfield North and New Southgate properties. The removal of this store, and the increase in space occupied across the rest of the estate, increased our closing occupancy by 1.6 percentage points ("ppts") to 63.5% (2012: 61.9%).

The average self-storage rate per sq ft in the UK for the year was £22.19 which is 5.3% down on 2012. However, the rate achieved in Q4 2013 represented a 2.0% improvement on the rate achieved during Q3 2013. RevPAF in the UK was £17.44 for the year, down 4.4% on the prior year. Q4 RevPAF was 4.5% ahead of our Q3 2013 position and we are encouraged by the positive quarter-on-quarter trends in both self-storage rate and RevPAF.

Finally, control of our cost base remains a strong focus and over the full year we have delivered significant year-on-year cost savings, partially mitigating the impact from the imposition of VAT on revenue.

EBITDA for the UK business was £34.8 million (2012: £36.9 million), a reduction of £2.1 million or 5.7% which is in line with management's June 2012 guidance of a £2-3 million EBITDA impact as a result of the imposition of VAT.

France - continued strong performance growing revenue, rate and occupancy

Our French business performed strongly throughout the year. The increasing maturity of stores opened in 2012, as well as underlying organic growth, has driven a 4.8% revenue increase over 2012 in constant exchange rates to €30.7 million (2012: €29.3 million) which equates to an 8.4% increase in sterling, reflecting the strengthening of the euro against sterling.

Closing occupancy was 0.76 million sq ft, an increase of 14,000 sq ft on the closing 2012 position. This represents 71.9% of MLA at 31 October 2013, up 0.3 percentage points compared with 31 October 2012 (71.6%).

The average self-storage rate per sq ft for 2013 in Paris was €37.49, 2.1% higher than 2012.

French RevPAF was €29.02 in the year, up 3.1% on 2012.

The cost base in Paris was well controlled during the year and savings in both employee costs and Head Office costs were achieved. In December 2010, the store at Nanterre was destroyed by a fire. The subsequent insurance claim resulted in a settlement of €2.9 million being received in the year which reflected estimated store profits for the subsequent three year period and loss of the French head office located at the site. The element relating to 2013 (€1.0 million) has been recognised in the underlying EBITDA in the year and €1.9 million has been recognised in exceptional items.

The improvements in revenue, underlying cost base reductions and the insurance proceeds relating to Nanterre, resulted in EBITDA in France of £16.0 million, (2012: £13.4 million), an improvement of £2.6 million or 19.4% on 2012.

Cost of Sales and Administrative Costs

During the year, significant cost savings were made in both the UK and Paris to mitigate the impact of the imposition of VAT on UK revenues. The main areas of cost savings were:

- Employee costs were reduced in both the stores and Head Office;

- TV advertising was not repeated resulting in savings in Sales and Marketing costs; and

- More efficient expenditure on utilities.

Further analysis of the cost base is included in the Finance Review.

Frederic Vecchioli

29 January 2014

Finance Review

Underlying Income Statement

The table below sets out the Group's underlying results of operations for the year ended 31 October 2013 and the year ended 31 October 2012.


	Financial Year
	2013	2012	Mvmt
	(£'m)	(£'m)	%

Revenue	96.1	98.8	(2.7%)
Underlying Costs	(45.3)	(48.5)	(6.6%)
Underlying EBITDA	50.8	50.3	1.0%
Leasehold Rent	(10.2)	(10.8)	(5.6%)
Underlying EBITDA after leasehold costs	40.6	39.5	2.8%
Depreciation	(0.4)	(0.4)	0.0%
Finance Charges	(18.4)	(18.8)	(2.1%)
Underlying profit before Tax	21.8	20.3	7.4%
Current Tax	(0.9)	(0.5)	80.0%
Cash Tax Earnings	20.9	19.8	5.6%
Underlying Deferred Tax	(2.2)	(5.5)	(60.0%)
EPRA Earnings	18.7	14.3

Average Shares In Issue (m)	187.9	187.5

Underlying (Cash Tax Adjusted) EPS (p)	11.12	10.56	5.3%
EPRA EPS (p)	9.95	7.63	30.5%

Management considers the above presentation of earnings to be representative of the underlying performance of the business.

Underlying EBITDA increased by 1% to £50.8 million (2012: £50.3 million) as the 2.7% reduction in revenue was fully offset by 6.6% savings in the underlying cost base (see below).

In addition, reductions in leasehold rent and finance charges resulted in a 7.4% improvement in underlying profit before tax to £21.8 million (2012: £20.3 million).

Given the Group's REIT status in the UK, tax is only paid in France and the current tax due in the period increased to £0.9 million (2012: £0.5 million).

Management considers that the most representative Earnings per Share ("EPS") measure is Cash Tax Adjusted EPS which increased by 5.3% to 11.12p (2012: 10.56p). EPRA EPS also reflects the deferred tax on underlying trading and increased by 30.5% to 9.95p from 7.63p in 2012. The change in the Group's tax status in the UK as a result of becoming a REIT resulted in a significant deferred tax credit arising from the release of the UK deferred tax liability.

Reconciliation of Underlying EBITDA

The table below reconciles the operating profit included in the Income Statement to Underlying EBITDA.


		Financial Year
		2013	2012
		(£'m)	(£'m)

Operating Profit		69.2	16.9

Adjusted for
	- (gain)/ loss on investment properties	(21.5)	37.5
	- depreciation	0.4	0.4
	- contingent rent	0.7	0.8
	- change in fair value of derivatives	1.3	(0.4)
Exceptional Items
	- insurance Proceeds	(1.6)	(5.3)
	- VAT and REIT related costs	0.3	0.2
	- restructuring costs/ other	2.0	0.2

Underlying EBITDA		50.8	50.3

The main reconciling items between operating profit and underlying EBITDA are the gain or loss on investment properties which moved from a £37.5 million loss in 2012 to a £21.5 million gain in 2013 and Exceptional Items which moved from a £4.9 million income in 2012 to a £0.7 million cost in 2013.

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.


	FY 2013			FY 2012
	UK	France	Total	UK	France	Total
	(£'m)	(£'m)	(£'m)	(£'m)	(£'m)	(£'m)

Revenue	70.2	25.9	96.1	74.9	23.9	98.8
Cost of Sales	(24.9)	(6.9)	(31.8)	(27.6)	(7.0)	(34.6)
Gross Profit	45.3	19.0	64.3	47.3	16.9	64.2
Gross Margin	65%	73%	67%	63%	71%	65%
Administrative Expenses	(10.5)	(3.0)	(13.5)	(10.4)	(3.5)	(13.9)
Underlying EBITDA	34.8	16.0	50.8	36.9	13.4	50.3
EBITDA Margin	50%	62%	53%	49%	56%	51%

EBITDA in the UK reduced by £2.1 million or 5.6% to £34.8 million (2012: £36.9 million). Revenue reductions of £4.7 million resulting largely from the imposition of VAT in the UK in October 2012 were partly offset by savings of £2.8 million in Cost of Sales.

In France, EBITDA increased by £2.6 million or 19% to £16.0 million (2012: £13.4 million). Revenue improvements of £2.0 million as well as savings in Cost of Sales of £0.1 million and Administrative Expenses of £0.5 million contributed to this improvement. The business benefited from £0.8 million of insurance income relating to the current financial year associated with the fire at the Nanterre store in 2010. Additional insurance income relating to other periods has been treated as exceptional.

VAT

The UK government introduced VAT on self-storage with effect from 1 October 2012 after its announcement in the March 2012 budget. Safestore worked with other industry members to lobby against this change during the consultation period. Ultimately, as a result of legal advice, it was decided not to mount a legal challenge against the government's decision.

We made our customers aware of the introduction of VAT on self-storage during Summer 2012. Domestic customers were informed of the impact the change would have on the cost of their storage arrangements. VAT registered business customers are able to reclaim the additional cost as input VAT.

In June 2012 we indicated that the likely cost to the business of the imposition of VAT was £5-6 million in revenue and £2-3 million in underlying EBITDA. The UK business performed marginally ahead of this guidance during the year ended 31 October 2013.

Safestore can now reclaim the VAT on its operating expenses which has partially mitigated the impact on profit (see costs breakdowns below). In addition, the Group is reclaiming previously irrecoverable VAT on capital expenditure under the Capital Goods Scheme. The total estimated amount reclaimable is £11.7 million and the Group has so far received £3.1 million of this amount. The present value of the balance receivable is included in Other Receivables on the Balance Sheet.

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 2013 and 2012.


		2013	% of total	2012	% of total	% change

UK	£'m	70.2	73%	74.9	76%	(6.2%)
France
Local currency	€'m	30.7		29.3		4.8%
Average Exchange Rate	€:£	1.19		1.22
France in sterling	£'m	25.9	27%	23.9	24%	8.4%

Total Revenue		96.1	100%	98.8	100%	(2.7%)

The Group's revenue decreased by 2.7% or £2.7 million in the year. The Group's occupied space was 30,000 sq ft higher at 31 October 2013 (3.31 million sq ft) than at 31 October 2012 (3.29 million sq ft). However, the average occupancy during the year was 0.8% lower at 3.26 million sq ft (2012: 3.28 million sq ft). Average rental rate for the Group was 2.1% lower in 2013 at £24.39 than in 2012 (£24.91).

In the UK revenue decreased by £4.7 million or 6.2%. Although the let sq ft was 17,000 sq ft higher at 31 October 2013 than at 31 October 2012, the average sq ft occupied during the year was down 1.9% compared to 2012 at 2.52 million sq ft (2012: 2.57 million sq ft). In addition, the average rental rate was down 5.3% at £22.19 (2012: £23.43).

The French business performed strongly increasing revenue by 4.8% on a constant currency basis. There has been a currency benefit in the year with the average exchange rate in 2013 of 1.185 representing a 3% strengthening of the Euro as compared with the average rate in 2012 of 1.222. This exchange rate improvement has contributed £0.8 million to consolidated Group revenues. In France closing occupancy increased by 1.9% to 0.76 million sq ft and average occupancy was up 2.7% at 0.74 million sq ft (2012: 0.72 million sq ft). The rental rate in France was €37.49 for the year, an increase of 2.1% on 2012 (€36.72).

Analysis of Cost Base

Cost of sales

The table below details the key movements in cost of sales between 2012 and 2013.


Cost of sales	Financial Year
	2013	2012
	(£'m)	(£'m)

Reported cost of sales	(31.8)	(34.6)

Nanterre insurance proceeds relating to the current financial year		0.8
New store costs annualisation		(0.3)
FX on French Costs		(0.2)
VAT benefit		1.9
Other cost movements (2%)		0.6

Underlying Cost of Sales for FY 2013		(31.8)

During the period £2.4 million of insurance proceeds were received in relation to the fire that destroyed the Nanterre store and Head Office in December 2010. The proceeds related to a three year period from December 2010 and the portion (£0.8 million) relating to the financial year ended 31 October 2013 were credited to Cost of Sales. The balance was credited to exceptional items.

The annualisation of the cost base of stores opened in 2012 increased costs by £0.3 million in the period.

The strengthening of the Euro in the period resulted in an increase in the sterling equivalent of French cost of sales of £0.2 million.

The imposition by the UK government of VAT on self-storage in October 2012 allowed VAT on input costs to be reclaimed by the business for the first time in 2013 whereas previously the cost base was stated gross of VAT. The estimated reduction in cost of sales arising from the reclaim of input VAT was £1.9 million.

During the year, management took a number of actions to reduce the cost base to mitigate the anticipated revenue reduction in the UK business. The reduction in other costs of £0.6 million 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 2012 and 2013.


Administrative Expenses		Financial Year
		2013	2012
		(£'m)	(£'m)

Reported Administrative Expenses		(16.6)	(9.8)

Adjusted For:
	Exceptional Items	0.7	(4.9)
	Depreciation	0.4	0.4
	Contingent Rent	0.7	0.8
	Changes in Fair Value of Derivatives	1.3	(0.4)

Underlying Administrative Expenses		(13.5)	(13.9)

Underlying Administrative Expenses for FY 2012			(13.9)

	TV advertising expenditure not repeated		1.1
	Management bonuses reinstated		(1.3)
	FX (including currency swaps)		(0.6)
	VAT benefit		0.4
	Other cost movements (6%)		0.8

Underlying Administrative Expenses for FY 2013			(13.5)

In order to arrive at Underlying Administrative Expenses adjustments are made to remove the impact of Exceptional Items, Depreciation, Contingent Rent and changes in the fair value of derivatives.

Exceptional items in the period included £1.6 million insurance income for the business interruption claim in relation to the fire at the Nanterre store in 2010. The amount included in exceptional items is the portion relating to financial periods outside the year ended 31 October 2013. In 2012 an amount of £5.3 million was received in relation to the buildings damage in relation to the same fire. Restructuring costs relating to the costs savings programme and executive management changes are included in exceptional items and amounted to a charge of £1.7 million. In the previous year costs of £0.2 million were incurred. Costs relating to the conversion to REIT status of £0.3 million were included within exceptional items in the period and similar costs of £0.2 million were included in the previous year.

Underlying administrative expenses were £0.4 million lower year-on-year at £13.5 million (2012: £13.9 million). Expenditure on a TV advertising campaign incurred in 2012 was not repeated in 2013 resulting in a saving of £1.1 million. This was offset by the cost of bonuses in the period of £1.3 million. In 2012 no bonus was paid.

The exchange impact of the euro currency swaps and of the sterling equivalent of French administrative costs was a charge of £0.6 million in the period and the benefit of the Group's ability to reclaim VAT on administrative costs was £0.4 million.

Other cost savings relating to the cost reduction programme in the year amounted to £0.8 million.

Gain/ Loss 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.


	2013	2012
	£'m	£'m

Movement on Investment Properties	26.0	(33.2)
Depreciation on Leasehold Properties	(4.5)	(4.3)

Gain/ (Loss) on Investment Properties	21.5	(37.5)

The movement in the 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 £19.4 million to positive valuation movement. This is primarily driven by the revaluation of the Whitechapel store to reflect the price achieved on its subsequent sale on 12 November 2013 and the impact of a number of lease re-gears. The French business contributed £6.6 million to the valuation uplift driven by improving trading metrics.

Operating Profit

Operating profit increased by £52.3 million from £16.9 million in 2012 to £69.2 million in 2013. The movement predominantly reflects the swing in the movement on Investment Properties from a loss of £37.5 million to a gain of £21.5 million partially offset by the negative movement in exceptional items from a gain of £4.9 million to a loss of £0.7 million.

Net finance costs

Net finance costs consist of interest receivable on bank deposits, interest payable and interest on obligations under finance leases.


	2013	2012
	£'m	£'m

Net bank interest payable	(18.3)	(17.8)
Capitalised Interest	-	0.2
Amortisation of Debt Issuance Costs	(0.1)	(1.2)
Interest on Obligations Under Finance Leases	(5.0)	(5.7)
Exceptional Finance expenses	-	(10.0)
Fair Value movement on derivatives	2.8	(1.9)

Net finance Costs	(20.6)	(36.4)

The increase in interest payable reflects the higher blended interest rate following the refinancing in May 2012.

Based on the year-end drawn debt position the effective interest rate is analysed as follows:


			Facility	Drawn	Hedged	Hedged	Bank	Hedged	Floating	Total
			£/€/$'m	£'m	£'m	%	Margin	Rate	Rate	Rate

UK Term Loan		£	230.0	£230.0	£196.7	86%	3.25%	1.71%	0.60%	4.80%
UK Revolver		£	30.0	-	-	-	3.25%	1.71%	0.60%	4.80%
UK Revolver- non-utilisation		£	30.0	-	-	-	1.46%	-	-	1.46%
Euro Revolver		€	70.0	£41.9	£33.9	81%	3.25%	1.36%	0.30%	4.41%
Euro Revolver- non-utilisation		€	21.0	-	-	-	1.46%	-	-	1.46%
US Private Placement 2019		$	67.0	£41.8	£41.8	100%	5.52%	-	-	5.83%
US Private Placement 2024		$	48.0	£29.9	£29.9	100%	6.29%	-	-	6.74%
Unamortised Finance Costs (US PP)			-	(£0.7)	-	-	-	-	-	-

Total	£		£391.6	£342.9	£302.3	88%				5.26%

The UK term loan of £230 million is fully drawn at the year-end and attracts a bank margin of 3.25%. The group has interest rate hedge agreements in place to June 2016 swapping LIBOR on £196.7 million at an effective rate of 1.71%.

The UK revolver of £30 million was undrawn at the year-end. The Group pays a non-utilisation fee of 1.46% on undrawn balances.

The Euro revolver of €70 million has €49 million (£41.9 million) drawn at the year-end and attracts a bank margin of 3.25%. The Group has interest rate hedges in place to June 2016 swapping Euribor on €40 million at an effective rate of 1.361%.

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 88% of the drawn debt. Net Interest payable includes a fair value gain in respect of the fair value movement on derivatives of £2.8 million (2012: loss of £1.9 million).

Overall, the Group had an effective interest rate on its borrowings of 5.3% during 2013. This is expected to reduce in 2014 subsequent to the capital structure changes announced in this statement.

The exceptional finance expense of £10 million in 2012 represented the debt issue costs relating to the previous banking facility which were written off as well as the debt issue costs of the facility agreed in May 2012. These costs were expensed as prescribed by IAS 39.

Interest on finance leases was £5.0 million (2012: £5.7 million) 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 is down from £10.8 million in 2012 to £10.2 million in 2013 reflecting the closure of the Enfield South store and other rent reductions negotiated in the period.

REIT Status

The Group converted to REIT status on 1 April 2013. Since then, the Group benefits from a zero tax rate on the Group's 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 Credit	2013	2012
	£'m	£'m

Deferred Tax release	(63.2)	-
Current Tax	0.9	0.5
Underlying Deferred Tax	2.2	5.5
Tax on Investment Properties Movement	1.9	(9.4)
Impact of underlying Tax Rate change from 25% to 23%	-	(6.3)
Other	(1.7)	(2.0)

Tax Credit	(59.9)	(11.7)

The income tax credit in the year is £59.9 million (2012: £11.7 million). The increase in the income tax credit is driven by a deferred tax credit of £63.2 million arising from the release of the UK deferred tax provision following the REIT conversion discussed above.

In the current year the current tax charge all relates to the French business and amounted to £0.9 million (2012: £0.5 million). Underlying deferred tax related to the French business and amounted to a charge of £2.2 million. In the prior year underlying deferred tax related to both the UK and French businesses and amounted to a charge of £5.5 million.

In the previous year the impact on the deferred tax charge of changes in UK tax rates from 25% to 23% was a credit of £6.3 million.

The tax impact of the gain on investment properties and the tax effect of exceptional items was a charge of £1.9 million (2012: credit of £9.4 million).

Profit after tax

The profit after tax for 2013 was £108.5 million as compared with a loss of £7.8 million in 2012. Basic EPS was 57.8 pence (2012: loss of 4.2 pence) and diluted EPS was 57.3 pence (2012: loss of 4.2 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 UK business converted to REIT status on 1 April 2013. REIT regulatory requirements determine the minimum level of Property Income Dividend ("PID") payable by the Group. The Group's full year dividend of 5.75 pence is 1.8% up on the prior year dividend of 5.65 pence. The PID element of the dividend is 4.08 pence.

Shareholders will be asked to approve the final dividend of 3.9 pence (2012: 3.8 pence) at the Annual General Meeting on 19 March 2014. If approved by Shareholders, the final dividend will be payable on 11 April 2014 to Shareholders on the register at close of business on 19 March 2014.

Property Valuation

Cushman & Wakefield has valued the Group's property portfolio. As at 31 October 2013, the total value of the Group's portfolio was £724.6 million (excluding Investment properties under construction of £5.6 million). This represents an increase of £39.5 million or 5.7% compared with the £685.1 million valuation as at 31 October 2012. A reconciliation of the movement is set out below:


	UK	France	Total	France
	£'m	£'m	£'m	€'m

Value as at 1 November 2012	520.7	164.4	685.1	204.1

Currency Translation Movement	-	10.4	10.4	-
Additions	3.2	1.0	4.2	1.2
Revaluation	19.2	6.6	25.8	7.7
Capital Goods Scheme	(2.2)	-	(2.2)	-
Reclassification	1.3	-	1.3	-

Value at 31 October 2013	542.2	182.4	724.6	213.0

The table above summarises the movement in the property valuations:

The exchange rate at 31 October 2013 was €1.17:£1 compared to €1.24:£1 at 31 October 2012. This movement in the foreign exchange rate has resulted in a £10.4 million positive currency translation movement in the period. This will impact the net asset value ("NAV") but has no impact on the Loan to Value ("LTV") covenant as the assets in Paris are tested in Euro.

The revaluation of the UK property portfolio shows an increase of £21.5 million compared with 31 October 2012. In November 2013, the Group sold its Whitechapel store for £41.1 million which represented a £14.6 million premium to the book value of the site. Given the proximity of this disposal to the 31 October 2013 year-end, the valuer reflected the sale value through the 31 October 2013 valuation which is the key driver of the increase in the UK valuation.

The French property valuation increased by €8.9 million in the year reflecting improving operating metrics in the business.

As a direct result of the imposition of VAT on self-storage in the UK in October 2012 we will be able to reclaim VAT previously written off under the Capital Goods Scheme. During the current financial year we have re-assessed the present value of the amount reclaimable and have reflected a further gain of £2.2 million through the Gain on Investment Properties.

The Group freehold exit yield for the valuation at 31 October 2013 was 7.73% which is a small improvement on the exit yield of 7.85% adopted at 31 October 2012.

The weighted average annual discount rate for the whole portfolio has followed a similar trend to exit yields and reduced from 12.11% to 11.91%.

The Company's pipeline of expansion stores is valued at £5.6 million as at 31 October 2013, a £0.2 million increase on the 2012 valuation of £5.4 million.

The property portfolio valuation has increased by £26.8 million from the valuation of £697.8 million at 30 April 2013 which reflects the revaluation of the Whitechapel store, further currency gains and the impact of lease re-gears in the UK business.

The adjusted EPRA NAV per share is 210.4 pence, up 11.5% on 31 October 2012. The main contributory factors in this movement are the positive impacts of the movements in the Euro exchange rate and the upward revaluation of the investment property portfolio.

Gearing and Capital Structure

Net debt stood at £382.8 million at 31 October 2013, a reduction of £11.4 million from the 2012 position of £394.2 million. Total Capital increased from £637.5 million at 31 October 2012 to £728.7 million at 31 October 2013. The net impact is that the gearing ratio has moved from 62% to 53% in the period.

Management also measures gearing with reference to its Loan To Value (LTV) ratio defined as Gross Debt (excluding Finance Leases) as a proportion of the valuation of Investment Properties and Investment Properties under Construction (excluding Finance Leases). At 31 October 2013 the Group LTV ratio was 47% as compared to 50% at 31 October 2012. Management considers that a Group LTV of c. 40% represents an appropriate medium term capital structure objective.

Subsequent to the end of the financial year the Group sold its Whitechapel property for £41.1 million. The Whitechapel property was valued within Investment Properties at £41.1 million at 31 October 2013. Subsequent to the sale of the Whitechapel site, the Group has used the proceeds to pay down debt under the existing UK Term Facility. In addition, the Group has paid down a further £9 million of UK Term loan from internal cash resources. The impact on Group LTV of this reduction in debt and associated property sale would have been to reduce Group LTV at 31 October 2013 to 43%.

The Group has also decided, given the significant de-leveraging described above, to Amend and Extend its existing UK bank facilities. As a result the £230 million UK Term Loan facility is reduced to £181.2 million and the UK revolver has been increased to £50 million. The Euro revolver remains at €70 million. The US Private Placement reduces from $115 million to $113 million.

The UK and Euro facilities are extended from June 2016 to June 2018 and the margin ratchet is reduced by 0.25% to a range of 2.25% to 3.25% based on the interest cover ratio. It is expected that the initial margin payable will be 2.75% as compared with the margin paid through most of 2013 of 3.25%. Repayments of £5 million will be made on the UK Term Facility every six months commencing on 31 October 2015.

The UK bank facilities and the US Private Placement share interest cover and Loan To Value 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 increases to 2.2:1 and in July 2016 the covenant ratchets to 2.4:1 where it remains until the end of the facilities' life. The French LTV 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' life.

There is no amortisation on the US Private Placement debt of $113 million. $66 million was issued at 5.52% (swapped to 5.83%) with 2019 maturity and $47 million was issued at 6.29% (swapped to 6.74%) with 2024 maturity.

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 2013 and, based on forecast projections, 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 2013 and 2012.


	Financial Year
	2013	2012
	(£'m)	(£'m)

Underlying EBITDA	50.8	50.3
Working Capital/ Exceptionals/ Other	1.5	2.3

Operating Cash flow	52.3	52.6

Capital Expenditure- investment properties	(4.7)	(20.2)
Capital Expenditure- property, plant and equipment	(0.2)	(1.3)
Capital Goods Scheme Receipt	3.1	-

Net outflow from Investing Activities	(1.8)	(21.5)

Interest Payments	(17.5)	(14.9)
Leasehold Rent Payments	(10.2)	(10.8)
Tax Payments	(0.1)	(0.7)

Free Cash flow (before Dividends and Financing Activities)	22.7	4.7

Dividends Paid	(10.6)	(10.1)
New Borrowings	(3.4)	5.9
Debt Issuance Costs	-	(7.7)
Net Cash flow from Financing Activities	(14.0)	(11.9)
Net Increase/ (Decrease) in cash	8.7	(7.2)

Operating cash flow reduced by £0.3 million in the period. The improvement in underlying EBITDA was reduced by the impact of an improvement in the movement on working capital and an increase in exceptional costs in the year.

The cash outflow from investing activities decreased significantly in the period from £21.5 million in 2012 to £1.8 million in 2013. No new stores were opened in the period which resulted in the decrease in capital expenditure. In addition the Group received £3.1 million under the Capital Goods Scheme. Since the imposition of VAT on self-storage in October 2012, VAT paid on certain capital expenditures from previous periods can now be reclaimed. Management has estimated the total amount to be reclaimed at £11.7 million. The first £3.1 million was received in 2013 and the present value of the balance is included in other receivables in the balance sheet.

The timing of interest payments resulted in an increase in this cash outflow in 2013. After the 2012 refinancing, the timing of interest payments resulted in a lower cash outflow which has returned to a normal schedule in 2013.

As a result of the above, free cash flow increased from £4.7 million in 2012 to £22.7 million in 2013.

Andy Jones

29 January 2014

Consolidated income statement

for the year ended 31 October 2013

	Notes	Group
		2013	2012
		£'m	£'m
Revenue	2	96.1	98.8
Cost of sales		(31.8)	(34.6)
Gross profit		64.3	64.2
Administrative expenses		(16.6)	(9.8)
EBITDA before exceptional items, change in fair value of derivatives, loss on investment properties and contingent rent		50.8	50.3
Exceptional items	4	(0.7)	4.9
Change in fair value of derivatives		(1.3)	0.4
Depreciation and contingent rent		(1.1)	(1.2)
Operating profit before gain/(loss) on investment properties		47.7	54.4
Gain/(loss) on investment properties	8	21.5	(37.5)
Operating profit	2	69.2	16.9
Change in fair value of derivatives		2.8	-
Total finance income	3	2.8	-
Finance expense before exceptional items and change in fair value of derivatives		(23.4)	(24.5)
Exceptional finance expenses		-	(10.0)
Change in fair value of derivatives		-	(1.9)
Total finance expense	3	(23.4)	(36.4)
Profit/(loss) before income tax		48.6	(19.5)
Income tax credit¹	5	59.9	11.7
Profit/(loss) for the year		108.5	(7.8)
Earnings per share for profit/(loss) attributable to the equity holders
- basic (pence)	7	57.8	(4.2)
- diluted (pence)	7	57.3	(4.2)

1 Includes an exceptional credit of £63.2 million (FY2012: £6.3 million) (see note 5).

The financial results for both years relate to continuing activities.

Consolidated statement of comprehensive income

for the year ended 31 October 2013

	Group
	2013	2012
	£'m	£'m
Profit/(loss) for the year	108.5	(7.8)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Cash flow hedges	-	(4.3)
Recycling of hedge reserve	(0.5)	1.5
Currency translation differences	6.0	(12.3)
Tax on items taken to other comprehensive income	(1.1)	1.0
Items that may be reclassified subsequently to profit or loss	4.4	(14.1)
Other comprehensive income/(expenditure), net of tax	4.4	(14.1)
Total comprehensive income/(expenditure) for the year	112.9	(21.9)

Consolidated balance sheet

as at 31 October 2013		Notes		Group
				2013		2012
				£'m		£'m
	Assets
	Non-current assets
	Investment properties		8		724.6		685.1
	Interests in leasehold properties		8		55.7		58.0
	Investment properties under construction		8		5.6		5.4
	Property, plant and equipment				1.8		3.7
	Deferred income tax assets				3.3		7.1
	Other receivables				6.4		6.0
					797.4		765.3
	Current assets
	Inventories				0.1		0.2
	Trade and other receivables				17.1		17.6
	Derivative financial instruments		11		-		3.0
	Cash and cash equivalents		15		15.8		6.9
					33.0		27.7
	Total assets				830.4		793.0
	Current liabilities
	Financial liabilities
	- bank borrowings		10		(5.0)		-
	- derivative financial instruments		11		(0.4)		(2.6)
	Trade and other payables				(34.8)		(32.3)
	Current income tax liabilities				(0.8)		-
	Obligations under finance leases		12		(8.6)		(9.6)
					(49.6)		(44.5)
	Non-current liabilities
	Financial liabilities
	- bank borrowings		10		(337.9)		(343.1)
	- derivative financial instruments		11		(10.6)		(12.9)
	Deferred income tax liabilities				(39.3)		(100.8)
	Obligations under finance leases		12		(47.1)		(48.4)
					(434.9)		(505.2)
	Total liabilities				(484.5)		(549.7)
	Net assets				345.9		243.3
	Equity
	Ordinary shares		13		1.9		1.9
	Share premium				28.4		28.3
	Other reserves				2.1		(2.3)
	Retained earnings				313.5		215.4
	Total equity				345.9		243.3

Consolidated statement of changes in shareholders' equity

for the year ended 31 October 2013

	Group
	Share	Share	Translation	Hedge	Retained
	capital	premium	reserve	reserve	earnings	Total
	£'m	£'m	£'m	£'m	£'m	£'m
Balance at 1 November 2011	1.9	28.3	11.8	-	233.1	275.1
Comprehensive income
Loss for the year	-	-	-	-	(7.8)	(7.8)
Other comprehensive income
Exchange differences on translation of foreign operations	-	-	(12.3)	-	-	(12.3)
Change in fair value of hedged instruments	-	-	-	(4.3)	-	(4.3)
Recycling of hedge reserve	-	-	-	1.5	-	1.5
Tax on items taken to other comprehensive income	-	-	-	1.0	-	1.0
Total other comprehensive income	-	-	(12.3)	(1.8)	-	(14.1)
Total comprehensive income	-	-	(12.3)	(1.8)	(7.8)	(21.9)
Transactions with owners
Dividends (note 6)	-	-	-	-	(10.1)	(10.1)
Employee share options	-	-	-	-	0.2	0.2
Transactions with owners	-	-	-	-	(9.9)	(9.9)
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
Exchange differences on translation of foreign operations	-	-	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 31 October 2013	1.9	28.4	5.5	(3.4)	313.5	345.9

Consolidated cash flow statement

for the year ended 31 October 2013

	Notes		Group
			2013		2012
			£'m		£'m
Cash flows from operating activities
Cash generated from operations		14		51.6		51.7
Interest paid				(22.5)		(20.6)
Interest received				-		0.1
Tax paid				(0.1)		(0.7)
Net cash inflow from operating activities				29.0		30.5
Cash flows from investing activities
Expenditure on investment properties and development properties				(4.7)		(20.2)
Proceeds in respect of Capital Goods Scheme				3.1		-
Purchase of property, plant and equipment				(0.2)		(1.3)
Net cash outflow from investing activities				(1.8)		(21.5)
Cash flows from financing activities
Equity dividends paid		6		(10.6)		(10.1)
Net proceeds from issue of new borrowings				2.9		357.2
Debt issue costs				-		(7.7)
Finance lease principal payments				(4.5)		(4.3)
Repayment of borrowings				(6.3)		(351.3)
Net cash outflow from financing activities				(18.5)		(16.2)
Net increase/(decrease) in cash and cash equivalents				8.7		(7.2)
Exchange gain/(loss) on cash and cash equivalents				0.2		(0.6)
Cash and cash equivalents at 1 November				6.9		14.7
Cash and cash equivalents at 31 October		15		15.8		6.9

1. Accounting Policies

i) Basis of preparation

The Board approved this preliminary announcement on 30 January 2014.

The financial information included in this preliminary announcement does not constitute the Group's statutory accounts for the years ended 31 October 2012 or 31 October 2013. Statutory accounts for the year ended 31 October 2012 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 October 2013 will be delivered to the Registrar of Companies following the Company's annual general meeting.

The auditors have reported on the 2013 and 2012 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 2013 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 2012.

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 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 12 months.

The following accounting standards, amendments and interpretations issued by IASB and IFRIC are effective for the Group's accounting period beginning on or after 1 November 2012 but had no material effect on the results or financial position of the Group disclosed in these financial statements:

All amounts are presented in £ sterling and are rounded to the nearest £0.1m, unless otherwise stated. This represents a change to the prior year where all amounts were presented in £ sterling and rounded to the nearest £1,000. Any differences in the comparative when compared with the prior year financial statements are due wholly to roundings and do not represent a restatement.

ii) New and amended standards

− IAS 1, 'Financial Statement Presentation' has been amended and introduced the requirement to group items presented in 'other comprehensive income' on the basis of whether they are potentially reclassable to profit or loss subsequently (reclassification adjustments).

− IAS 12, 'Deferred Tax: Recovery of Underlying Assets' introduces a rebuttable presumption that deferred tax on investment properties measured at fair value will be recognised on a sales basis, unless an entity has a business model that would indicate the investment property will be consumed in the business.

iii) 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. Those that are most relevant to the group are set out below.

− IFRS 10, 'Consolidated Financial statements', which establishes a single control model that applies to all entities including special purpose entities and requirements management to exercise judgement over which entities are required to be consolidated. IFRS 10 is effective for annual periods beginning on or after 1 January 2014.

− IFRS 11, 'Joint arrangements', under IFRS 11 the structure of the joint arrangement, although still an important consideration, is no longer the main factor in determining the type of joint arrangement and therefore subsequent accounting. IFRS 11 is effective for annual periods beginning on or after 1 January 2014.

− IFRS 12, 'Disclosures of interests in other entities' brings together all the disclosure requirements about an entity's interests in

subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after 1 January 2014.

− 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. IFRS 13 is

effective for annual periods beginning on or after 1 January 2013.

In addition, as part of the IASB's project to replace IAS 39 'Financial Instruments: Recognition and Measurement', the IASB has issued the phases of IFRS 9 covering the classification and measurement of financial assets and the accounting for financial liabilities. The other phases, covering hedge accounting and impairment, are still to be completed. In December 2011, the IASB decided that IFRS 9 will be effective for annual periods beginning on or after 1 January 2015. The date for EU adoption is not yet known.

All the above IFRSs, IFRIC interpretations and amendments to existing standards are endorsed by the European Union ('EU') at the date of approval of these financial statements. The directors are currently considering the potential impact arising from the future adoption of these standards and interpretations listed above.

iv) 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 2013 Annual Report and Accounts.

v) 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 segment. 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, supported by its central Group functions:

• UK; and

• France.

The chief operating decision-maker, being the Executive Directors, identified in accordance with the requirements of IFRS 8, assess 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. Unallocated items principally comprise balances in relation to the group's derivative transactions, and these are designated as Central below:

	UK	France	Central	Group
Year ended 31 October 2013	£'m	£'m	£'m	£'m
Continuing operations
Revenue	70.2	25.9	-	96.1
EBITDA before exceptional items, change in fair values of derivatives, loss on investment properties, depreciation and contingent rent	34.8	16.0	-	50.8
Exceptional items	(1.8)	1.1	-	(0.7)
Contingent rent and depreciation	(0.6)	(0.5)	-	(1.1)
Change in fair value of derivative	-	-	(1.3)	(1.3)
Operating profit/(loss) before gain on investment properties	32.4	16.6	(1.3)	47.7
Gain on investment properties	16.7	4.8	-	21.5
Operating profit/(loss)	49.1	21.4	(1.3)	69.2
Finance expense before changes in fair value and exceptional items	(18.8)	(4.6)	-	(23.4)
Finance income	-	-	2.8	2.8
Profit before tax	30.3	16.8	1.5	48.6
Income tax	63.2	(3.3)	-	59.9
Profit for the year	93.5	13.5	1.5	108.5
Total assets	615.1	215.3	-	830.4

	UK	France	Central	Group
Year ended 31 October 2012	£'m	£'m	£'m	£'m
Continuing operations
Revenue	74.9	23.9	-	98.8
EBITDA before exceptional items, change in fair values of derivatives, loss on investment properties, depreciation and contingent rent	36.9	13.4	-	50.3
Exceptional items	(0.4)	5.3	-	4.9
Contingent rent and depreciation	(0.6)	(0.6)	-	(1.2)
Change in fair value of derivative	-	--	0.4	0.4
Operating profit before loss on investment properties	35.9	18.1	0.4	54.4
Loss on investment properties	(36.5)	(1.0)	-	(37.5)
Operating profit/(loss)	(0.6)	17.1	0.4	16.9
Finance expense before changes in fair value and exceptional items	(20.6)	(3.9)	-	(24.5)
Change in fair value of derivative	-	-	(1.9)	(1.9)
Exceptional finance expense	(8.7)	(1.3)	-	(10.0)
Finance income	-	-	-	-
(Loss)/profit before tax	(29.9)	11.9	(1.5)	(19.5)
Income tax expense	14.7	(3.3)	0.3	11.7
(Loss)/profit for the year	(15.2)	8.6	(1.2)	(7.8)
Total assets	599.8	190.2	3.0	793.0

Inter-segment transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties. There is no material impact from inter-segment transactions on the Group's results.

3. Finance income and costs

		2013	2012
	Note	£'m	£'m
Finance costs
Interest payable on bank loans and overdraft		(18.3)	(17.8)
Amortisation of debt issue costs on bank loan	10	(0.1)	(1.2)
Interest on obligations under finance leases		(5.0)	(5.7)
Capitalised interest		-	0.2
Fair value movement of derivatives		-	(1.9)
Exceptional finance expense		-	(10.0)
Total finance cost		(23.4)	(36.4)
Finance income
Fair value movement of derivatives		2.8	-
Net finance costs		(20.6)	(36.4)

No interest has been capitalised in 2013. In FY 2012 interest has been capitalised at an average rate of 3.5%.

The exceptional finance expense in the prior year of £10.0 million represents the debt issue costs relating to the previous banking facility written off and the debt issue costs of the new facility taken out in 2012. These costs were expensed in accordance with IAS 39 as they did not meet the recognition criteria under IAS 39.

Included within interest payable of £18.3 million (FY2012: £17.8 million) is £2.3 million (FY2012: £2.7 million) of interest relating to derivative financial instruments that are economically hedging the Group's borrowings. The total change in fair value of derivatives for the year is a gain of £2.8 million (FY2012: £1.9 million charge).

4. Exceptional items

	2013	2012
	£'m	£'m
Restructuring costs	(1.7)	(0.2)
Insurance proceeds	1.6	5.3
VAT and REIT related costs	(0.3)	(0.2)
Other exceptional Items	(0.3)	-
Total exceptional (costs)/income	(0.7)	4.9

Restructuring costs of £1.7 million (FY 2012: £0.2 million) were incurred in respect of organisational changes during the year. Included within this cost are store closure costs £0.2 million (FY2012: £nil), Executive Board restructuring costs £0.9 million (FY2012:£nil), capital structure refinancing costs £0.2 million (FY2012: £nil) and other restructuring costs £0.4 million (FY2012: £0.2 million).

During the period £2.4 million of insurance proceeds received in relation to a fire that destroyed the Nanterre store and Head Office in December 2010. The proceeds related to a three year period from December 2010 and the portion (£0.8 million) relating to the financial year ended 31 October 2013 was credited to Cost of Sales. The balance of £1.6 million (FY 2012: £5.3 million) was credited to exceptional costs £1.6 million.

Costs of £0.3 million were incurred by the Group during the year ended 31 October 2013 (FY2012: £0.2 million) in respect of professional and legal fees challenging the changes to VAT legislation on self-storage which was implemented with effect from 1 October 2012.

5. Income tax credit

Analysis of tax credit in the year:

	2013	2012
	£'m	£'m
Current tax:
- UK corporation tax	-	-
- tax in respect of overseas subsidiaries	(1.1)	(0.5)
- adjustment in respect of prior year	0.2	-
	(0.9)	(0.5)
Deferred tax:
- current year, including exceptional credit of £63.2 million (FY2012: £6.3 million)	59.9	12.1
- adjustment in respect of prior year	0.9	0.1
	60.8	12.2
Tax credit	59.9	11.7

Reconciliation of income tax credit

The tax for the period is lower (2012: lower) than the standard effective rate of corporation tax in the UK for the year ended 31 October 2013 of 23.4% (2012: 24.8%). The differences are explained below:

	2013	2012
	£'m	£'m
Profit/(loss) before tax	48.6	(19.5)
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.4% (2012: 24.8%)	11.4	(4.8)
Effect of:
- permanent differences	(6.3)	(0.9)
- profits from the tax exempt business	(3.2)	-
- difference from overseas tax rates	1.7	0.8
- losses not recognised in the year	0.8	-
- adjustments in respect of prior years	(1.1)	(0.1)
- indexation on revaluation of investment properties	-	(0.4)
- re-measurement of deferred tax liability from change in UK rate	-	(6.3)
- release of UK deferred tax arising on the conversion to REIT	(63.2)	-
Tax credit	(59.9)	(11.7)

The Group converted to a REIT on 1 April 2013. As a result the Group will no longer pay 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.

The deferred tax credit of £60.8 million for the year ended 31 October 2013 comprises an exceptional credit of £63.2 million arising from the release of UK deferred tax following the REIT conversion and a charge of £2.4 million in respect of the French business. The deferred tax credit of £12.2 million for the year ended 31 October 2012 included an exceptional credit of £6.3 million arising as a result of the reduction of the UK corporation tax rate from 25% to 23%.

The main rate of Corporation Tax in the UK reduced from 24% to 23% with effect from 1 April 2013 and will further reduce to 21% from 1 April 2014 and 20% from 1 April 2015. Accordingly the Group's results for this accounting period are taxed at an effective rate of 23.4%. Due to the Group converting to a REIT on 1 April 2013 there will be no deferred taxation impact in respect of the changes in taxation rates.

6. Dividends per share

The dividend paid in 2013 was £10.6 million (5.65 pence per share) (FY2012: £10.1 million (5.40 pence per share)). A dividend in respect of the year ended 31 October 2013 of 3.90 pence (FY2012: 3.80 pence) per share, amounting to a final dividend of £7.3 million (FY2012: £7.1 million), is to be proposed at the AGM on 19 March 2014. The ex-dividend date will be 12 March 2014 and the record date 14 March 2014 with an intended payment date of 11 April 2014. The final dividend has not been included as a liability at 31 October 2013.

The PID element of the final dividend is 3.90 pence making the PID payable for the year 4.08 pence per share.

7. Earnings per share

Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares held as treasury shares. Diluted earnings per share is 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.

	Year ended 31 October 2013			Year ended 31 October 2012
	Earnings	Shares	Pence	Earnings	Shares	Pence
	£'m	million	per share	£'m	million	per share
Basic	108.5	187.9	57.8	(7.8)	187.5	(4.2)
Dilutive securities	-	1.30	-	-	1.6	-
Diluted	108.5	189.2	57.3	(7.8)	189.1	(4.2)

As the basic EPS in the prior year is a loss per share, the above adjustments would not be dilutive.

Adjusted earnings per share

Adjusted earnings per share represents profit/(loss) after tax adjusted for the gain/ (loss) on investment properties, exceptional items, change in fair value of derivatives and the associated tax thereon. The Directors consider that these alternative measures provide useful information on the performance of the Group.

ERPA earnings and earnings per share before non-recurring items, movements on revaluations of investment properties, changes in the fair value of derivatives have been disclosed to give a clearer understanding of the Groups underlying trading performance.

	Year ended 31 October 2013			Year ended 31 October 2012
	Earnings	Shares	Pence	Earnings	Shares	Pence
	£'m	million	per share	£'m	million	per share
Basic	108.5	187.9	57.8	(7.8)	187.5	(4.2)
Adjustments:
(Gain)/Loss on investment properties	(21.5)	-	(11.4)	37.5	-	20.0
Exceptional operating items	0.7	-	0.3	(4.9)	-	(2.6)
Exceptional finance costs	-	-	-	10.0	-	5.3
Change in fair value of derivatives	(1.5)	-	(0.8)	1.4	-	0.8
Tax adjustments	(63.6)	-	(33.9)	(18.8)	-	(10.0)
Adjusted	22.6	187.9	12.0	17.4	187.5	9.3
EPRA Adjusted
Depreciation of Leasehold properties	(4.5)	-	(2.4)	(4.3)	-	(2.3)
Tax on leasehold depreciation adjustment	0.6	-	0.3	1.2	-	0.7
EPRA basic	18.7	187.9	9.9	14.3	187.5	7.7
Adjustment for cash tax	2.2	-	1.2	5.5	-	2.9
Adjusted cash tax earnings¹	20.9	187.9	11.1	19.8	187.5	10.6

1 - Cash tax adjusted earnings per share is defined as Profit or Loss for the year before exceptional items, change in fair value of derivatives, gain/loss on investment properties and the associated tax impacts exceptional tax items and deferred tax charges

Gain on investment properties includes depreciation on leasehold properties of £4.5 million (FY2012: £4.3 million) and the related tax thereon of £0.6 million (FY2012: £1.2 million). As an industry standard measure, EPRA earnings are presented. EPRA earnings of £18.7 million (FY2012: £14.3 million) and EPRA earnings per share of 9.9pence (FY2012: 7.7pence) are calculated after further adjusting for these items.

	Group
	2013	2012	Movement
EPRA adjusted income statement (non-statutory)	£'m	£'m	%
Revenue	96.1	98.8	(2.7)
Operating expenses (excluding depreciation and contingent rent)	(45.3)	(48.5)	6.6
EBITDA before contingent rent	50.8	50.3	1.0
Depreciation and contingent rent	(1.1)	(1.2)	(8.3)
Operating profit before depreciation on leasehold properties	49.7	49.1	1.2
Depreciation on leasehold properties	(4.5)	(4.3)	(4.7)
Operating profit	45.2	44.8	0.9
Net financing costs	(23.4)	(24.5)	4.5
Profit before income tax	21.8	20.3	7.4
Income tax	(3.1)	(6.0)	48.3
Profit for the year ("EPRA Earnings")	18.7	14.3	30.8
Adjusted EPRA earnings per share	9.9pence	7.7pence
Final dividend per share	3.9pence	3.8pence

8. Investment properties, investment properties under construction and interests in leasehold properties

			Investment
		Interests in	property	Total
	Investment	leasehold	under	investment
	property	properties	construction	properties
	£'m	£'m	£'m	£'m
As at 1 November 2012	685.1	58.0	5.4	748.5
Additions	4.2	20.6	-	24.8
Disposals	-	(13.4)	-	(13.4)
Capital Goods Scheme	(2.2)	-	-	(2.2)
Reclassifications	1.3	-	-	1.3
Revaluations	25.8	-	0.2	26.0
Adjustment to Present Value	-	(5.8)	-	(5.8)
Depreciation	-	(4.5)	-	(4.5)
Exchange movements	10.4	0.8	-	11.2
As at 31 October 2013	724.6	55.7	5.6	785.9

The adjustment to present value on Interest in leasehold properties reflects the improved recoverability of input taxation following the implementation of VAT on UK Self-storage sales from 1 October 2012.

The Capital Goods Scheme adjustment relates to an increase in the discounted receivable initially recognised as at 31 October 2012.

			Investment
		Interests in	property	Total
	Investment	leasehold	under	investment
	property	properties	construction	properties
	£'m	£'m	£'m	£'m
As at 1 November 2011	713.6	62.5	15.1	791.2
Additions	7.1	1.0	10.8	18.9
Capital Goods Scheme	(9.0)	-	-	(9.0)
Reclassifications	20.7	-	(20.7)	-
Revaluations	(33.5)	-	0.3	(33.2)
Depreciation	-	(4.3)	-	(4.3)
Exchange movements	(13.8)	(1.2)	(0.1)	(15.1)
As at 31 October 2012	685.1	58.0	5.4	748.5

Gain/(loss) on investment properties comprise:

	2013	2012
	£'m	£'m
Revaluations	26.0	(33.2)
Depreciation	(4.5)	(4.3)
	21.5	(37.5)

			Revaluation
			on
	Cost	Valuation	Cost
	£'m	£'m	£m
Freehold stores
As at 1 November 2012	350.2	560.1	209.9
Movement in year	9.8	31.0	21.2
As at 31 October 2013	360.0	591.1	231.1
Leasehold stores
As at 1 November 2012	71.6	125.0	53.4
Movement in year	3.9	8.5	4.6
As at 31 October 2013	75.5	133.5	58.0
All stores
As at 1 November 2012	421.8	685.1	263.3
Movement in year	13.7	39.5	25.8
As at 31 October 2013	435.5	724.6	289.1

The valuation of £724.6 million (FY2012: £685.1 million) excludes £0.8 million in respect of owner occupied property, which is included within Property, Plant and Equipment. Rental income earned from investment properties for the years ended 31 October 2013 and 31 October 2012 was £78.3 million and £79.41 million, respectively.

The freehold and leasehold investment properties have been valued as at 31 October 2013 by external valuers, Cushman & Wakefield LLP ("C&W"). The valuation has been carried out in accordance with 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. Three non-trading properties were valued on the basis of Fair Value. 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:

•	the members of the RICS who have been the signatories to the valuations provided to the Group for the same purposes as this valuation have been so since October 2006;
•	C&W has been carrying out bi-annual 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 note that, although there were a number of self-storage transactions in 2007, the only significant transactions since 2007 are:

1. The sale of a 51% share in Shurgard Europe which was announced in January 2008 and completed on 31 March 2008.

2. The sale of the former Keepsafe portfolio by Macquarie to Alligator Self Storage which was completed in January 2010;

3. The purchase by Shurgard Europe of the 80% interests held by its joint venture partner (Arcapita) in its two European joint venture vehicles, First Shurgard and Second Shurgard. The price paid was 172 million Euros and the transaction was announced in March 2011. The two joint ventures owned 72 self-storage properties; and

4. The purchase of Selstor, Sweden, by Pelican Self Storage/M3 Capital in Q4 2012.

There have been eight single store market transactions in the UK since 2010. C&W state that due to the lack of comparable market information in the self storage sector, there is greater uncertainty attached to their opinion of value than would be anticipated during a more active market.

Valuation method and assumptions

The valuation of the operational self-storage facilities has been prepared having regard to trading potential. Cash flow projections have been prepared for all of the properties reflecting estimated absorption, revenue growth and expense inflation. A discounted cash flow method of valuation based on these cash flow projections has been used by C&W to arrive at their opinion of Fair Value for these properties.

C&W has adopted different approaches for the valuation of the leasehold and freehold assets as follows:

Freehold and long leasehold (UK and France)

The valuation is based on a discounted cash flow of the net operating income over a ten year period and notional sale of the asset at the end of the tenth year.

Assumptions:

•	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 valuation the assumed stabilised occupancy level for the trading stores (both freeholds and all leaseholds) open at 31 October 2013 averages 77.12% (31 October 2012: 78.36 %). 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 36.95 months (31 October 2012: 36.59 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 valuation included in the accounts assumes rental growth in future periods. If an assumption of no rental growth is applied to the external valuation, the net initial yield pre-administration expenses for the 107 mature stores (i.e. excluding those stores categorised as "developing") is 7.42% (31 October 2012: 7.50%) rising to a stabilised net yield pre-administration expenses of 9.75% (31 October 2012: 9.98%).
•	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 11.91% (31 October 2012: 12.11%).
•	Purchaser's costs of 5.8% for the UK and 6.2% for France have been assumed initially and sales plus purchaser's costs totalling 7.8% (UK) and 8.2% (France) are assumed on the notional sales in the tenth year in relation to freehold and long leasehold stores.

Short leaseholds (UK)

The same methodology has been used as for freeholds, except that no sale of the assets in the tenth year is assumed but the discounted cash flow is extended to the expiry of the lease. The average unexpired term of the Group's UK short-term leasehold properties is 12.71 years (31 October 2012: 11.97 years). The average unexpired term excludes the French commercial leases.

Short leaseholds (France)

In relation to the French commercial leases, C&W has valued the cash flow projections in perpetuity due to the security of tenure arrangements in that market and the potential compensation arrangements in the event of the landlord wishing to take possession. The valuation treatment is therefore the same as for the freehold properties. The capitalisation rates on these stores reflect the risk of the landlord terminating the lease arrangements.

Investment properties under construction (UK only)

C&W has valued the stores in development adopting the same methodology as set out above but on the basis of the cash flow projection expected for the store at opening and allowing for the outstanding costs to take each store from its current state to completion and full fit out. C&W has allowed for carry costs and construction contingency, as appropriate.

Immature stores: value uncertainty

C&W has assessed the value of each property individually. However, 9 of the stores in the portfolio are relatively immature and have low initial cash flow. C&W has endeavoured to reflect the nature of the cash flow profile for these properties in their valuation, and the higher associated risks relating to the as yet unproven future cash flow, by adjustment to the capitalisation rates and discount rates adopted. However, immature low cash flow stores of this nature are rarely, if ever, traded individually in the market, unless as part of a distressed sale or similar situation. Although, there is more evidence of immature low cash flow stores being traded as part of a group or portfolio transaction.

C&W consider there to be market uncertainty in the self-storage sector due to the lack of comparable market transactions and information. The degree of uncertainty relating to the 9 immature stores is greater than in relation to the balance of the properties due to there being even less market evidence that might be available for more mature properties and portfolios.

C&W state that in practice, if an actual sale of the properties were to be contemplated then any immature low cash flow stores would normally be presented to the market for sale lotted or grouped with other more mature assets owned by the same entity, in order to alleviate the issue of negative or low short term cash flow. This approach would enhance the marketability of the group of assets and assist in achieving the best price available in the market by diluting the cash flow risk.

C&W has not adjusted their opinion of Fair Value to reflect such a grouping of the immature assets with other properties in the portfolio and all stores have been valued individually. However, they highlight the matter to alert the Group to the manner in which the properties might be grouped or lotted in order to maximise their attractiveness to the market place.

C&W consider this approach to be a valuation assumption but not a Special Assumption, the latter being an assumption that assumes facts that differ from the actual facts existing at the valuation date and which, if not adopted, could produce a material difference in value.

C&W has not assumed that the entire portfolio of properties owned by the Group would be sold as a single lot and the value for the whole portfolio in the context of a sale as a single lot may differ significantly (either higher or lower) from the aggregate of the individual values for each property in the portfolio, reflecting the lotting assumption described above.

Valuation assumption for purchaser's costs

The Group's investment property assets have been valued for the purposes of the financial statements after deducting notional purchaser's costs of 5.8% (UK) and 6.2% (France) of gross value, as if they were sold directly as property assets. The valuation is an asset valuation which is strongly linked to the operating performance of the business. They would have to be sold with the benefit of operational contracts, employment contracts and customer contracts, which would be very difficult to achieve except in a corporate structure.

This approach follows the logic of the valuation methodology in that the valuation is based on a capitalisation of the net operating income after allowing a deduction for operational cost and an allowance for central administration costs. Sale in a corporate structure would result in a reduction in the assumed Stamp Duty Land Tax but an increase in other transaction costs reflecting additional due diligence resulting in a reduced notional purchaser's cost of 2.75% of gross value. All the significant sized transactions that have been concluded in the UK in recent years were completed in a corporate structure. The Group therefore instructed C&W to prepare additional valuation advice on the basis of purchaser's cost of 2.75% of gross value which are used for internal management purposes.

9. Net assets per share

EPRA earnings and earnings per share before non-recurring items, movements on revaluations of investment properties, changes in the fair value of derivatives have been disclosed to give a clearer understanding of the Group's underlying trading performance.

The European Public Real Estate Association ('EPRA') has issued recommended bases for the calculation of net assets per share information and this is shown in the table below.

	2013	2012
	£'m	£'m
Analysis of net asset value:
Basic and diluted net asset value	345.9	243.3
Fair Value of Derivatives (net of tax)	11.0	9.4
Adjustments: deferred tax liabilities	39.3	100.8
Adjusted net asset value	396.2	353.5
Basic net assets per share (pence)	183.7	129.8
EPRA basic net assets per share (pence)	210.4	188.6
Diluted net assets per share (pence)	182.4	129.3
EPRA diluted net assets per share (pence)	208.8	187.4
	Number	Number
Shares in issue	188,345,784	188,135,088

Basic net assets per share is shareholders' funds divided by the number of shares at the year end. Diluted net assets per share is shareholders' funds divided by the number of shares at the year end, adjusted for dilutive share options of 1,297,572 shares (FY2012: 1,611,335 shares). EPRA diluted net assets per share exclude deferred tax liabilities. The EPRA NAV, which further excludes fair value adjustments for debt and related derivatives net of tax, was £396.2 million (FY2012: £353.5 million) giving EPRA net assets per share of 210.4 pence (FY2012:188.6 pence). The Directors consider that these alternative measures provide useful information on the performance of the Group.

EPRA adjusted balance sheet (non-statutory)

	Group
	2013	2012	Movement
	£'m	£'m	%
Assets
Non-current assets	797.4	765.3	4.2
Current assets	33.0	24.7	33.6
Total assets	830.4	790.0	5.1
Liabilities
Current liabilities	(49.2)	(44.5)	(10.6)
Non-current liabilities	(385.0)	(392.0)	1.8
Total liabilities	(434.2)	(436.5)	0.5
EPRA net asset value	396.2	353.5	12.0
EPRA net asset value per share	210.4p	188.6p	11.5

10. Financial liabilities - bank borrowings and secured notes

	2013	2012
Current	£'m	£'m
Bank loans and overdrafts due within one year or on demand:
Secured - bank loan	5.0	-
	5.0	-

	2013	2012
Non-current	£'m	£'m
Bank loans and secured notes:
Secured	338.6	343.9
Debt issue costs	(0.7)	(0.8)
	337.9	343.1

The bank facilities of £260 million and €70 million run to June 2016 and a $115 million US private placement note issue of seven and twelve years has maturities extending to 2019 and 2024.

The blended cost of interest on the overall debt is of 5.3% per annum. The bank facilities attract a margin over LIBOR/EURIBOR ratchet operated by reference to the Group's performance against its interest cover covenant. The margin ratchets between 2.5% and 3.5%. Approximately 83% of the drawn bank facilities have been hedged at 1.71% LIBOR and 1.36% EURIBOR. The Company has issued $67 million 5.52% Series A Senior Secured Notes due 2019 and 6.29% $48 million Series B Senior Secured Notes due 2024. The proceeds of the US private placement have been fully hedged by cross currency swaps converting the US Dollar exchange risk into GBP Sterling. The loan is carried at amortised cost.

The bank loans and overdrafts are secured by a fixed charge over the Group's investment property portfolio. As part of the Groups interest rate management strategy, the Group entered into several interest rate swap contracts, details of which are shown in note 11.

Bank loans and secured notes are stated before unamortised issue costs of £0.7 million (FY2012: £0.8 million).

Bank loans and secured notes are repayable as follows:

	Group
	2013	2012
	£'m	£'m
In one year or less	5.0	-
Between one and two years	10.0	5.0
Between two and five years	256.9	267.7
After more than five years	71.7	71.2
Bank loans and secured notes	343.6	343.9
Unamortised issue costs due after one year	(0.7)	(0.8)
	342.9	343.1

The effective interest rates at the balance sheet date were as follows:

	2013	2012
Bank loans (UK Term Loan)	Quarterly LIBOR plus 3.25%	Quarterly LIBOR plus 3.5%
Bank Loans (Euro Term Loan)	Quarterly EURIBOR plus 3.25%	Quarterly EURIBOR plus 3.5%
Private placement notes	Weighted average rate of 6.21%	Weighted average rate of 6.21%

Secured loan notes bear interest at 5.83% on $67 million and 6.7375% on $48 million, as a result of cross currency swap agreements.

Borrowing facilities

The Group has the following undrawn committed borrowing facilities available at 31 October in respect of which all conditions precedent had been met at that date:

	Floating rate
	2013	2012
	£'m	£'m
Expiring beyond one year	57,989	53,698

The carrying amounts of the Group's borrowings are denominated in the following currencies:

	2013	2012
	£'m	£'m
Sterling	230.0	230.0
Euros	41.9	42.7
US Dollar	71.7	71.2
	343.6	343.9

11. Financial instruments

Financial instruments disclosures are set out below. Additional disclosures are set out in the Financial review.

	2013		2012
	£'m	£'m	£'m	£'m
	Asset	Liability	Asset	Liability
Interest rate swaps	-	(5.9)	2.6	(11.1)
Cross currency swaps	-	(4.3)	-	(4.3)
Foreign exchange contracts	-	(0.8)	0.4	(0.1)
	-	(11.0)	3.0	(15.5)

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 fair values of all financial instruments are equal to their book value, with the exception of bank loans and finance lease obligations which are set out below. The carrying value less impairment provision of trade receivables, other receivables and the carrying value of trade payables and other payables approximate their fair value.

The fair values of bank loans and finance leases are calculated as:

	2013		2012
	Book value	Fair value	Book value	Fair value
	£'m	£'m	£'m	£'m
Bank loans	342.9	365.6	343.1	396.7
Finance lease obligations	55.7	96.9	58.0	96.2

Fair value hierarchy

IFRS 7 requires fair value measurements to be recognised using a fair value hierarchy that reflects the significance of the inputs used in the measurements, according to the following levels:

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:

	2013	2012
Assets per the balance sheet	£'m	£'m
Derivative financial instruments - Level 2	-	3.0
	2013	2012
Liabilities per the balance sheet	£'m	£'m
Derivative financial instruments - Level 2	11.0	15.5

There were no transfers between Levels 1, 2 and 3 fair value measurements during the current or prior year.

Over the life of the Group's derivative financial instruments, the cumulative fair value gain/loss on those instruments will be £nil as it is the Group's intention to hold them to maturity.

Interest rate swaps not designated as part of a hedging arrangement

The notional principal amount of the outstanding interest rate swap contracts at 31 October 2013 was £196.7 million and €40 million (FY2012: £196.7 million and €40 million). At 31 October 2013 the fixed interest rates were Sterling at blended 1.710% and Euro at 1.361% (FY2012: Sterling at 1.710% and Euro at 1.361%) and floating rates are at quarterly LIBOR and quarterly EURIBOR. The LIBOR swaps and the EURIBOR swaps expire in June 2016.

The Group entered into a new banking facility agreement which replaced the existing facilities due to mature in August 2013. The existing interest hedge agreements were replaced by new interest hedge agreements to coincide with the new maturity in June 2016. No settlement payments were required to be made to any counterparties and the embedded value of the existing interest hedge agreements were incorporated within the new agreements. The movement in fair value recognised in the income statement was a gain of £2.8 million (FY2012: loss of £1.9 million).

Foreign exchange swap not designated as part of a hedging arrangement

At 31 October 2013, the Group had foreign currency swap contracts outstanding for a notional principal amount of between €4.5 million and €6 million every six months commencing April 2013 and terminating on 31 October 2015. The Group will receive the Sterling equivalent of the notional principal amount at an average exchange rate of €1.2169 to the pound and pay the Sterling equivalent of the average monthly spot rates for the six months. The movement in the fair value recognised in the income statement in the period was a loss of £1.3 million (FY2012: gain of £0.4 million).

Cross currency swaps designated as part of a hedging arrangement

The Group entered into cross currency swaps to mitigate the foreign exchange risk arising on future interest payments and the principal repayments arising from the $67 million and $48 million US Secured Senior Notes. These cross currency swaps commenced in May 2012 and terminate in 2019 and 2024 in line with the maturity of the notes. The movement in fair value recognised in other comprehensive income in the period was a loss of £0.5 million (pre-tax impact) (FY2012: loss of £2.8 million pre-tax impact).

Financial instruments by category

		Assets at fair
	Loans and	value through
	receivables	profit and loss	Total
Group	£'m	£'m	£'m
Assets as per balance sheet
Trade receivables and other receivables excluding prepayments	11.4	-	11.4
Cash and cash equivalents	15.8	-	15.8
As at 31 October 2013	27.2	-	27.2

	Liabilities at fair	Other financial
	value through	liabilities at
	profit and loss	amortised cost	Total
Group	£'m	£'m	£'m
Liabilities as per balance sheet
Borrowings (excluding finance lease liabilities)	-	342.9	342.9
Finance lease liabilities	-	55.7	55.7
Derivative financial instruments	11.0	-	11.0
Trade payable and other payables	-	34.8	34.8
As at 31 October 2013	11.0	433.4	444.4

		Assets at fair
	Loans and	value through
	receivables	profit and loss	Total
Group assets as per balance sheet	£'m	£'m	£'m
Trade receivables and other receivables excluding prepayments	11.7	-	11.7
Derivative financial instruments	-	3.0	3.0
Cash and cash equivalents	6.9	-	6.9
As at 31 October 2012	18.6	3.0	21.6

	Liabilities at fair	Other financial
	value through	liabilities at
	profit and loss	amortised cost	Total
Group liabilities as per balance sheet	£'m	£'m	£'m
Borrowings (excluding finance lease liabilities)	-	343.1	343.1
Finance lease liabilities	-	58.0	58.0
Derivative financial instruments	15.5	-	15.5
Trade payable and other payables	-	32.3	32.3
As at 31 October 2012	15.5	433.4	448.9

The interest rate risk profile, after taking account of derivative financial instruments, is as follows:

	2013			2012
	Floating rate	Fixed rate	Total	Floating rate	Fixed rate	Total
	£'m	£'m	£'m	£'m	£'m	£'m
Borrowings	40.3	302.6	342.9	41.5	301.6	343.1

The weighted average interest rate of the fixed rate financial borrowing was 5.22% (FY2012: 5.41%) and the weighted average period for which the rate is fixed was four years for bank borrowings and seven/twelve years for the notes (FY2012: four years for bank debt; seven/twelve for notes).

Maturity Analysis

The table below analyses the Group's financial liabilities and non-settled derivative financial instruments into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity dates. The amounts disclosed in the table are the contractual undiscounted cash flows.

	Less than	One to two	Two to five	More than
	one year	years	years	five years
	£'m	£'m	£'m	£'m
2013
Borrowings	22.1	27.8	274.4	92.1
Derivative financial instruments	7.2	7.2	15.6	14.7
Contractual interest payments and finance lease charges	10.1	10.5	26.4	49.9
Trade and other payables	34.8	-	-	-
	74.2	45.5	316.4	156.7
2012
Borrowings	16.4	21.5	302.3	89.6
Derivative financial instruments	7.0	7.0	17.9	19.4
Contractual interest payments and finance lease charges	10.2	10.0	24.3	51.7
Trade and other payables	32.3	-	-	-
	65.9	38.5	344.5	160.7

12. Obligations under finance leases

			Present value of
	Minimum lease payments		minimum lease payments
	2013	2012	2013	2012
	£'m	£'m	£'m	£'m
Within one year	10.2	10.1	8.6	9.6
Within two to five years	36.9	34.4	26.1	25.2
Greater than five years	49.9	51.7	21.0	23.2
	97.0	96.2	55.7	58.0
Less: future finance charges on finance leases	(41.3)	(38.2)	-	-
Present value of finance lease obligations	55.7	58.0	55.7	58.0

	2013	2012
	£'m	£'m
Current	8.6	9.6
Non-current	47.1	48.4
	55.7	58.0

13. Called up share capital

	2013	2012
	£'m	£'m
Called up, allotted and fully paid
188,345,784 (FY2012: 188,135,088) ordinary shares of 1 pence each	1.9	1.9

14. Cash flow from operating activities

Reconciliation of operating profit to net cash inflow from operating activities:

	2013	2012
Cash generated from continuing operations	£'m	£'m
Profit/(loss) before income tax	48.6	(19.5)
(Gain)/loss on investment properties	(21.5)	37.5
Depreciation	0.4	0.4
Impairment of Non-Current Assets	0.5	-
Change in fair value of derivatives	1.3	(0.4)
Net Finance expense	20.6	36.4
Employee share options	0.2	0.2
Changes in working capital:
(Increase)/decrease in trade and other receivables	(0.6)	1.8
Increase/(decrease) in trade and other payables	2.1	(4.7)
Cash generated from continuing operations	51.6	51.7

15. Analysis of movement in net debt

			Non-cash
	2012	Cash flows	movements	2013
	£'m	£'m	£'m	£'m
Cash in hand	6.9	8.7	0.2	15.8

Debt due within one year	-	-	(5.0)	(5.0)
Debt due after one year	(343.1)	3.4	1.8	(337.9)
Total net debt excluding finance leases	(336.2)	12.1	(3.0)	(327.1)
Finance leases due within one year	(9.6)	4.5	(3.5)	(8.6)
Finance leases due after one year	(48.4)	-	1.3	(47.1)
Total finance leases	(58.0)	4.5	(2.2)	(55.7)
Total net debt	(394.2)	16.6	(5.2)	(382.8)

Non-cash movements relate to reclassification of non-current debt to current debt, amortisation of debt issue costs, foreign exchange movements and unwinding of discount.

16. Contingent liabilities

As part of the Group banking facility, the Company has guaranteed the borrowings totalling £343.6 million (FY2012: £343.9 million) of fellow Group undertakings by way of a charge over all of its property and assets. There are similar cross guarantees provided by the Group companies in respect of any bank borrowings which the Company may draw under a Group facility agreement. The financial liability associated with this guarantee is considered remote and therefore no provision has been recorded.

17. Capital commitments

The Group had £nil capital commitments as at 31 October 2013 (FY2012: £2.3 million).

18. Related party transactions

The Group's shares are widely held.

During the year £nil (FY2012: £nil) transactions were carried out with related parties.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR PGUQAGUPCPUB

Companies

Safestore Holdings (SAFE)

Friday, 15th November 2024

COMPANIES COVERED:

TTG LAND SOLI

M&A activity sees TT Electronics share price jump after Volex goes public with unsolicited approach, Solid State slips off news of order delay and Land Securities tops FTSE-100 in wake of earnings update.

Full Archive

UK 100

Latest directors dealings

2 hours ago Urban Logistics Reit
2 hours ago Ocado Group
2 hours ago AJ Bell
2 hours ago Foresight Enterprise VCT
2 hours ago Mitie Group

All directors dealings today