TIDMSAFE
RNS Number : 4984B
Safestore Holdings plc
11 February 2022
Safestore Holding plc Annual Report and Accounts and AGM
documents
11 February 2022
Safestore Holdings plc ("the Company" or "the Group")
Publication of Annual Report and Accounts 2021, Notice of 2022
Annual General Meeting and Proxy Voting Arrangements
Safestore Holdings plc ("the Company") announces, in accordance
with Listing Rules 9.6.1 and 9.6.3, that copies of the Annual
Report and Accounts 2021, Notice of 2022 Annual General Meeting
have been submitted to the Financial Conduct Authority and will
shortly be available for inspection on the national storage
mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
.
These documents have been posted to those shareholders who have
elected to receive hard copy communications or have otherwise been
made available to shareholders today.
The Company's 2022 Annual General Meeting will be held at
Brittanic House, Stirling Way, Borehamwood, Hertfordshire WD6 2BT
at 12 noon on Wednesday, 16 March 2022. Full details of the
proposed resolutions are set out in the Notice of Meeting.
The Annual Report and Accounts for the year ended 31 October
2021 is now available for download from the Company's website
at:
https://www.safestore.co.uk/corporate/investors/report - and -
presentations/
The Notice of 2022 Annual General Meeting is also available for
download from the Group's website at:
https://www.safestore.co.uk/corporate/investors/report - and -
presentations/
All shareholders are encouraged to complete and submit a proxy
appointment online by using our electronic proxy appointment
service offered by our Registrar, Link Group, at
www.signalshares.com . All votes must be received by 12 noon on 14
March 2022.
Shareholders unable to locate any of the documents on the web
page, need help with voting online or require a paper proxy form,
please contact our Registrar, Link Group by email to
enquiries@linkgroup.co.uk or you may call Link on +44 (0)371 664
0391. Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be charged
at the applicable international rate. Lines are open between 9.00am
and 5.30pm Monday to Friday, excluding public holidays in England
and Wales.
The information included in the appendix to this announcement
has been extracted from the Annual Report and is reproduced here
solely for the purpose of complying with Disclosure Guidance and
Transparency Rule ("DTR") 6.3.5 on respect of how to make annual
financial reports available to the public.
The content of this announcement, including the appendix, should
be read in conjunction with the preliminary announcement of annual
results, (the "Preliminary Results Announcement")* released on 13
January 2022, which is available on the Company's website at:
https://www.safestore.co.uk/corporate/investors/report-and-presentations/
Together these announcements constitute the material required by
DTR 6.3.5 to be communicated in full unedited text through a
Regulatory Information Service. This material is not a substitute
for reading the full Annual Report. Defined terms used in the
appendix refer to terms as defined in the Annual Report. Page
numbers in the appendix refer to pages in the Annual Report.
For further information, please contact:
Safestore Holdings plc
Helen Bramall, Company Secretary Tel: 020 8732 1500
LEI Code : 213800WGA3YSJC1YOH73
Additional Disclosures Not Included in Preliminary Results
Announcement
Statement of Directors' responsibilities
Page 109 of the Annual Report contains the following statement
regarding responsibility for the financial statements and the
management report included in the Annual Report.
The Directors, who are named on pages 66 and 67, are responsible
for preparing the Annual Report and Financial Statements in
accordance with applicable law and regulation.
Company law requires the Directors to prepare such financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union and Article 4 of the IAS
Regulation and have also chosen to prepare the parent company
financial statements in accordance with Financial Reporting
Standard 101 'Reduced Disclosure Framework'. Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and the parent company and of the profit or
loss of the Group for that period.
In preparing the parent company financial statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether Financial Reporting Standard 101 'Reduced
Disclosure Framework' has been followed, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Group's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the parent company and the Group and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the parent company and the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website at www.safestore.co.uk. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' responsibility statement
We confirm that, to the best of our knowledge:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Group and the undertakings included in the consolidation
taken as a whole;
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
Group and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and
uncertainties that they face; and
-- the Annual Report and Financial Statements, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's position and
performance, business model and strategy.
Principal risks and risk management
Pages 33 to 38 of the Annual Report contain the following
statement on principal risks and uncertainties faced by the
Group.
Risks are considered at every business level and are assessed,
discussed and taken into account when deciding upon future
strategy, approving transactions and monitoring performance
Risks and risk management
The Board recognises that effective risk management requires
awareness and engagement at all levels of our organisation.
Risk management process
The Board is responsible for determining the nature of the risks
the Group faces, and for ensuring that appropriate mitigating
actions are in place to manage them in a manner that enables the
Group to achieve its strategic objectives.
Effective risk management requires awareness and engagement at
all levels of our organisation. It is for this reason that the risk
management process is incorporated into the day-to-day management
of our business, as well as being reflected in the Group's core
processes and controls. The Board has defined the Group's risk
appetite and oversees the risk management strategy and the
effectiveness of the Group's internal control framework. Risks are
considered at every business level and are assessed, discussed and
taken into account when deciding upon future strategy, approving
transactions and monitoring performance.
Strategic risks are identified, assessed and managed by the
Board, with support from the Audit Committee, which in turn is
supported by the Risk Committee. Strategic risks are reviewed by
the Audit Committee to ensure they are valid and that they
represent the key risks associated with the current strategic
direction of the Group. Operational risks are identified, assessed
and managed by the Risk Committee and Executive Team members, and
reported to the Board and the Audit Committee. These risks cover
all areas of the business, such as finance, operations, investment,
development and corporate risks.
The risk management process commences with rigorous risk
identification sessions incorporating contributions from functional
managers and Executive Team members. The output is reviewed and
discussed by the Risk Committee, supported by members of senior
management from across the business. The Board, supported by the
Risk Committee, identifies and prioritises the top business risks,
with a focus on the identification of key strategic, financial and
operational risks. The potential impact and likelihood of the risks
occurring are determined, key risk mitigations are identified and
the current level of risk is assessed against the Board's risk
appetite. These top business risks form the basis for the principal
risks and uncertainties detailed in the section below.
Principal risks and uncertainties
The principal risks and uncertainties described are considered
to have the most significant effect on Safestore's strategic
objectives.
The key strategic and operational risks are monitored by the
Board and are defined as those which could prevent us from
achieving our business goals. Our current strategic and operational
risks and key mitigating actions are as follows:
Risk Current mitigation activities Developments since
2020
---------------------- ----------------------------------------------------------------------- ---------------------
Strategic risks
----------------------------------------------------------------------------------------------------------------------
The Group develops The Group's strategy
business plans * The strategy development process draws on internal is regularly reviewed
based on a wide and external analysis of the self-storage market, through the annual
range of variables. emerging customer trends and a range of other planning
Incorrect assumptions factors. and budgeting
about the economic process,
environment, and regular
the self-storage * Continuing focus on yield-management with regular reforecasts
market, or changes review of demand levels and pricing at each are prepared during
in the needs individual store. the year.
of customers
or the activities The Group expanded
of customers * Continuing focus on building the Safestore brand, the
may adversely acquisitions and development projects. joint venture with
affect the returns Carlyle,
achieved by the which acquired Opslag
Group, potentially * The portfolio is geographically diversified with and Leiwas stores in
resulting in performance monitoring covering the personal and the Netherlands. The
loss of shareholder business customers by segments. Group continues to
value or loss earn
of the Group's management fees and
status as the * Detailed and comprehensive sensitivity and scenario a 20% share of the
UK's largest modelling taking into consideration variable profits
self storage assumptions. of the joint venture.
provider.
The acquisition of
* Robust cost management. new
stores together with
new store openings
have
been fully integrated
in the Group's store
portfolio.
The level of risk is
considered similar to
the 31 October 2020
assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
Pandemic risk
----------------------------------------------------------------------------------------------------------------------
The Covid-19 outbreak The Covid-19 pandemic
is an unprecedented * The resilient nature of the Group's businesses, our has resulted in a
global event whose robust balance sheet, and the market fundamentals significant
impacts and duration that underpin our businesses inherently provide reduction in the
are now more widely mitigation to the Group from pandemic risk. economic
understood. While growth of the UK and
the Group now Europe in 2020 and
more clearly * Our Group strategic plans and forecasts have provided 2021.
understands an additional layer of mitigation through the The implications of
the impacts of Covid-19 crisis. Covid-19 have been
the pandemic on thoroughly
the business, considered with
we need to be * The Group continues to monitor and assess the respect
adaptable in ensuring potential and realised impacts of Covid-19. to the Group's
our business strategy
resilience through the annual
and maintaining planning
our strong and budgeting
performance. process.
Covid-19 will
continue
to be monitored
through
regular and periodic
reforecasts and
scenario
analysis during 2022.
The level of risk is
considered similar to
the 31 October 2020
assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
Finance risk
----------------------------------------------------------------------------------------------------------------------
Lack of funding In October 2019, the
resulting in * Funding requirements for business plans and the Group issued a
inability to timing for commitments are reviewed regularly as part further
meet business of the monthly management accounts. GBP125 million
plans or satisfy Sterling
liabilities or and Euro loan notes,
a breach of covenants. * The Group manages liquidity in accordance with maturing in seven and
Board-approved policies designed to ensure that the ten years.
Group has adequate funds for its ongoing needs. The Group's
loan-to-value
ratio ("LTV") has
* The Board regularly monitors financial covenant broadly
ratios and headroom. remained constant
during
the year, decreasing
* All of the Group's banking facilities now run to 30 4ppts from 29% to
June 2023. The US Private Placement Notes mature in 25%,
five, seven, eight and ten years. with increased debt
due to development
and
* New US Private Placement Notes secured during the acquisition activity
year with maturity ranging from seven years (2028) to being partially
twelve years (2033). offset
by the valuation
increase
in the store
portfolio.
Since the end of
2020,
there have been
significant
opportunities to
invest
in new stores, in
both
the UK and throughout
Europe, and as a
result
the Group has secured
additional US Private
Placement Note
funding
for GBP150 million
with
a further uncommitted
shelf debt facility
of c. GBP80 million.
Therefore, this risk
continues to remain
low and broadly
unchanged
from the 31 October
2020 assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
Treasury risk
----------------------------------------------------------------------------------------------------------------------
Adverse currency Euro denominated
or interest rate * Guidelines are set for our exposure to fixed and borrowings
movements could floating interest rates and use of interest rate continue to provide
see the cost swaps to manage this risk. an effective, natural
of debt rise, hedge against the
or impact the Euro-denominated
Sterling value * Foreign currency denominated assets are financed by net assets of our
of income flows borrowings in the same currency where appropriate. French
or investments. and Spanish
businesses.
* The Group has entered into FX forwards to reduce the
volatility associated with the translation risk of We have managed the
the Euro. transition from LIBOR
to SONIA effectively.
This risk remains
low.
Mitigation of future
rate increases is
provided
by our interest rate
swaps and fixed
interest
borrowings, so the
risk
of adverse interest
rate fluctuations
remains
broadly unchanged
since
the prior year.
---------------------- ----------------------------------------------------------------------- ---------------------
Property investment and development risk
----------------------------------------------------------------------------------------------------------------------
Acquisition and Projects are not
development of * Thorough due diligence is conducted and detailed pursued
properties that analysis is undertaken prior to Board approval for when they fail to
fail to meet property investment and development. meet
performance our rigorous
expectations, investment
overexposure * Execution of targeted acquisitions and disposals. criteria, and
to developments post-investment
within a short reviews indicate that
timeframe or * The Group's overall exposure to developments is sound and appropriate
the inability monitored and controlled, with projects phased to investment decisions
to find and open avoid over-commitment. have been made.
new stores may
have an adverse The capital
impact on the * The performance of individual properties is requirements
portfolio valuation, benchmarked against target returns and of development
resulting in post-investment reviews are undertaken. projects
loss of shareholder undertaken during the
value. year have been
Corporate transactions carefully
may be at risk forecasted and
of competition monitored,
referral or post and we continue to
transaction legal maintain
or banking significant capacity
formalities. within our financing
arrangements.
We continue to pursue
investment and
development
opportunities, and
consider
our recent track
record
to have been
successful.
Therefore, the Board
considers that there
has been no
significant
change to this risk
since the 31 October
2020 assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
Valuation risk
----------------------------------------------------------------------------------------------------------------------
Value of our The valuation of the
properties declining * Independent valuations are conducted regularly by Group's portfolio has
as a result of experienced, independent, professionally qualified continued to grow
external market valuers. during
or internal management the year, reflecting
factors could both valuation gains
result in a breach * A diversified portfolio which is let to a large arising from the
of borrowing number of customers helps to mitigate any negative increasing
covenants. impact arising from changing conditions in the profitability of our
In the absence financial and property markets. portfolio and
of relevant additions
transactional to our portfolio
evidence, valuations * Headroom of LTV banking covenants is maintained and through
can be inherently reviewed. corporate
subjective leading acquisitions
to a degree of and the opening of
uncertainty. * Current gearing levels provide sizeable headroom on new
our portfolio valuation and mitigate the likelihood development stores.
of covenants being endangered. The level of this
risk
is viewed as broadly
similar to the 31
October
2020 assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
Occupancy risk
----------------------------------------------------------------------------------------------------------------------
A potential loss Covid-19 has resulted
of income and * Personal and business customers cover a wide range of in a contraction in
increased vacancy segments, sectors and geographic territories with economic growth.
due to falling limited exposure to any single customer. However,
demand, oversupply recent like-for-like
or customer default, occupancy trends have
which could also * Dedicated support for enquiry capture. been strong and the
adversely impact newly opened stores
the portfolio are performing well.
valuation. * Weekly monitoring of occupancy levels and close
management of stores. Growth in our store
portfolio diversifies
the potential impact
* Management of pricing to stimulate demand, when of underperformance
appropriate. of an individual
store.
* Monitoring of reasons for customers vacating and exit The risk continues to
interviews conducted. remain low and
consistent
with the assessment
* Independent feedback facility for customer for the year ended 31
experience. October 2020.
* The like-for-like occupancy rate across the portfolio
has continued to grow partly due to flexibility
offered on deals by in-house marketing and the
Customer Support Centre.
---------------------- ----------------------------------------------------------------------- ---------------------
Real estate investment trust ("REIT") risk
----------------------------------------------------------------------------------------------------------------------
Failure to comply The Group has
with the REIT * Internal monitoring procedures are in place to ensure remained
legislation could that the appropriate rules and legislation are compliant with all
expose the Group complied with and this is formally reported to the REIT
to potential Board. legislation
tax penalties throughout
or loss of its the year.
REIT status. There has been no
significant
change to this risk
since the 31 October
2020 assessment.
In addition, we have
also reviewed the
recent
amendments to the UK
REIT rules, taking
effect
from 1 April 2022,
which
do not affect this
assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
Catastrophic event
----------------------------------------------------------------------------------------------------------------------
A major catastrophic Continuing focus from
event could mean * Business continuity plans are in place and tested. the Risk Committee,
that the Group with particular
is unable to attention
carry out its * Back-up systems at offsite locations and remote to specific issues.
business for working capabilities.
a sustained period The level of risk is
or health and considered similar to
safety issues * Reviews and assessments are undertaken periodically the 31 October 2020
put customers, for enhancements to supplement the existing compliant assessment.
staff or property aspects of buildings and processes.
at risk.
These may result * Monitoring and review by the Health and Safety
in reputational Committee.
damage, injury
or property damage,
or customer * Robust operational procedures, including health and
compensation, safety policies, and a specific focus on fire
causing a loss prevention and safety procedures.
of market share
and/or income.
* Fire risk assessments in stores.
* Periodic security review of all systems supported by
external monitoring and penetration testing.
* Limited retention of customer data.
* Online colleague training modules.
---------------------- ----------------------------------------------------------------------- ---------------------
Regulatory compliance risk
----------------------------------------------------------------------------------------------------------------------
The regulatory The framework of tax
landscape for * Monitoring and review by the Risk Committee. controls has been
UK listed companies reviewed
is constantly during the year,
developing and * Project-specific steering committees to address the ensuring
becoming more implementation of new regulatory requirements. key tax risks are in
demanding, with line with the Group's
new reporting obligations. All
and compliance * Liaison with relevant authorities and trade regulatory
requirements associations. compliance risks have
arising frequently. been monitored during
Non- compliance the year.
with these regulations * Where a store is at risk of compulsory purchase,
can lead to penalties, contingency plans are developed. The level of risk is
fines or reputational considered similar to
damage. the 31 October 2020
Changes in tax * Legal and professional advice. assessment.
regimes could
affect tax
expenditure. * Online training modules.
The Group is
also subject
to the risk of
compulsory purchases
of property,
which could result
in a loss of
income and impact
the portfolio
valuation.
---------------------- ----------------------------------------------------------------------- ---------------------
Marketing risk
----------------------------------------------------------------------------------------------------------------------
Our marketing We continue to build
strategy is critical * Constant measuring and monitoring of our web presence functional expertise
to the success and ensuring compliance with rules and regulations. at Group level in
of the business. performance
This includes marketing, organic
maintaining web * Market leading website. and
leadership and local searches and
our relationship analytics.
with Google. * Use of online techniques to drive brand visibility.
The Group marketing
A lack of effective forum continues to
strategy would * Our pricing strategy monitors and adapts to evolving review
result in loss customer behaviour. performance, market
of income and developments and our
market share ongoing improvement
and adversely plan.
impact the portfolio
valuation. We have implemented
a new value and
quality
focused performance
marketing strategy.
The level of risk is
considered similar to
the 31 October 2020
assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
IT security/GDPR
----------------------------------------------------------------------------------------------------------------------
Cyber-attacks During the year the
and data security * Constant monitoring by the IT department and Group continued to
breaches are consultation with specialist advice firms ensure we invest
becoming more have the most up-to-date security available. in digital security.
prominent with Some of the changes
greater sophistication include more frequent
of attacks. This * Twice yearly formal IT security review at Group Audit penetration testing
has the potential Committee. of internet facing
to result in systems,
reputational adding components
damage, fines * We minimise the retention of customer and colleague such
or customer data in accordance with GDPR best practice. as anti-ransomware as
compensation, well as the
causing a loss replacement
of market share * The policies and procedures are under constant review of components such as
and income and benchmarked against industry best practice. These firewalls to the
policies also include defend, detect and response latest
policies. technology and
specification.
The risk is not
considered
to have increased for
the Group nor is the
Group considered to
be at greater risk
than
the wider industry;
however, we consider
that digital threats
on the whole are
increasing.
The level of risk is
considered similar to
the 31 October 2020
assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
Brand and Reputational risk
----------------------------------------------------------------------------------------------------------------------
Our reputation, The Retail Service
with Safestore's * Constant involvement by the Retail Service team to function
growth and the engage with customers and address their concerns. always engages with
increased awareness customers to resolve
of self storage, any issues or
including increased * Constant training of the store teams to provide a complaints.
demand driving clear and concise communication strategy to
higher prices, customers. Pages 50 to 54 of our
may potentially sustainability report
attract greater provide insight into
social media attention * Our understanding of and engagement with all our how we engage with
and scrutiny. stakeholders enables early visibility of our
dissatisfaction. customers and the
community.
The level of risk is
considered similar to
the 31 October 2020
assessment.
---------------------- ----------------------------------------------------------------------- ---------------------
Geographical expansion
----------------------------------------------------------------------------------------------------------------------
The Group has The level of risk is
invested in expanding * Large portfolio of potential new sites, prioritised considered similar to
the overseas based on detailed research into areas most likely to the 31 October 2020
operations be successful. assessment.
of the business
through both
subsidiaries * Strong operational knowledge and experience in
and the Joint integrating new business.
Venture with Carlyle
over the last
two years. * We have well documented procedures for the
integration of new acquisitions and a good track
Suitable new sites record of recent success.
may become more
difficult to find,
with new sites
failing to achieve
the required occupancy
and therefore
deliver the required
sales and
profitability
within an acceptable
timeframe.
Integration of
smaller acquisitions
may be challenging
where the
infrastructure
of the acquired
business is not
of a level required
by Group.
---------------------- ----------------------------------------------------------------------- ---------------------
Human Resource Risk
----------------------------------------------------------------------------------------------------------------------
Fundamental to The level of risk is
the Group's success * The Group embarked upon its five-year strategic plan considered to have
are our people. in 2017 and during this period has had an efficient, increased
As such, due to high performing and stable management team in place. slightly from the 31
market Our retention strategy aims to ensure we achieve long October 2020
competitiveness, term engagement, through a combination of motivating assessment.
we are exposed factors.
to a risk of colleague
turnover, and
subsequent loss * We continue to consult regularly with our management
of key personnel team and monitor involuntary turnover. We maintain
and knowledge. adequate succession for our key talent.
* The Board and Remuneration Committee regularly review
colleague feedback provided through surveys, our
workforce advisory panel and CEO town hall events.
These mechanisms enable colleagues to raise questions
,
discuss wider business issues and provide feedback on
subjects including wider workforce remuneration.
* In early 2021, Safestore received the Investors in
People Platinum Accreditation. This demonstrates that
our colleagues are happy, healthy, safe and engaged
in supporting Safestore to deliver sustainable
business performance.
---------------------- ----------------------------------------------------------------------- ---------------------
Climate change related risk
----------------------------------------------------------------------------------------------------------------------
The Group is exposed As part of our
to climate change * The good working order of our stores is of critical journey
related transition importance to our business model with our standing to enhance our
and physical risks. commitment to provide long term sustainable real disclosures
Physical risks estate investment. along the
may affect the recommendations
Group's stores of the TCFD, the
and may result * Physical climate risk of new developments is Group
in higher maintenance, evaluated as part of the investment appraisal process is continuing to
repair and insurance for new developments. develop
costs. Failing its understanding of
to transition its exposure and
to a low carbon * We have a proactive maintenance programme in place vulnerability
economy may cause with a regular programme of store inspection with our to climate change
an increase in maintenance teams following sustainable principles risk
taxation, decrease and, wherever practicable, using materials that have Our Sustainability
in access to loan recycled content or are from sustainable sources. Committee,
facilities and with representation
reputational damage. from across all
* If we choose to develop a store in a high risk area, levels
we usually proactively deploy flood mitigation of the business, is
measures. considering the
impact
of climate change
* We are committed to build to a minimum standard of related
BREEAM 'Very Good' on all of our new store risks and is working
developments. with the Board and
its
suppliers to develop
* All new store developments are registered with the an ambitious plan to
Considerate Constructors Scheme, which considers the reduce carbon
public, the workforce and the environment. emissions.
Our investment
appraisal
process has been
updated
to consider climate
change related risks
of new investments.
The level of risk is
considered similar to
the 31 October 2020
---------------------- ----------------------------------------------------------------------- ---------------------
Consequences of the UK's decision to leave the EU ("Brexit")
----------------------------------------------------------------------------------------------------------------------
The uncertainty As the Group had only
associated with * Economic uncertainty is not a new risk for the Group, limited exposure to
the UK's future but Brexit increased the likelihood of previously the direct risks that
relationship with recognised risks, and is addressed under the finance arose due to Brexit,
the EU has risk, treasury risk and valuation risk categories the level of this
significantly above. risk
reduced. is considered to have
As the Group does significantly reduced
not directly rely * Self storage is a localised industry, with a broad since the 31 October
on imports or and diversified customer base, so demand has shown no 2020 assessment.
exports, the Group initial adverse impact post Brexit and is unlikely to
is largely protected be significantly impacted in the future.
from the near
term impact of
the UK's exit * The Group's workforce in the UK includes a low
from the EU. proportion of employees whose right to work in the UK
Nonetheless, may be impacted by potential Brexit-related
changes associated legislation changes.
with further
regulation
will be closely
monitored and
assessed.
---------------------- ----------------------------------------------------------------------- ---------------------
Viability statement
The UK Corporate Governance Code requires us to issue a
"viability statement" declaring whether we believe Safestore can
continue to operate and meet its liabilities, taking into account
its current position and principal risks. The overriding aim is to
encourage Directors to focus on the longer term and be more
actively involved in risk management and internal controls. In
assessing viability, the Board considered a number of key factors,
including our strategy (see page 6 ), our business model (see pages
15 and 16) , our risk appetite and our principal risks and
uncertainties (see pages 33 to 37 of the strategic report).
The Board is required to assess the Company's viability over a
period greater than twelve months, and in keeping with the way that
the Board views the development of our business over the long term
a period of three years is considered appropriate, and is
consistent with the timeframes incorporated into the Group's
strategic planning cycle, with the review considering the Group's
cash flows, dividend cover, REIT compliance, financial covenants
and other key financial performance metrics over the period. Our
assessment of viability therefore continues to align with this
three-year outlook.
In assessing viability, the Directors considered the position
presented in the budget and three-year plan recently approved by
the Board. In the context of the current environment, four
plausible sensitivities were applied to the plan, including a
stress test scenario. These were based on the potential financial
impact of the Group's principal risks and uncertainties and the
specific risks associated with the continued Covid-19 pandemic.
These scenarios are differentiated by the impact of demand and
enquiry levels , average rate growth and the level of cost savings.
A test sensitivity was also performed where we have carried out a
reverse stress test to model what would be required to breach ICR
and LTV covenants which indicated highly improbable changes would
be needed before any issues were to arise .
During the year, Safestore was successful in extending its
borrowing facilities, with the issuance of the equivalent of GBP149
million new Sterling and Euro denominated US Private Placement
("USPP") Notes. The current revolving credit facilities of GBP250
million and EUR70 million mature in June 2023. In assessing
viability sensitivities, it has been assumed that RCF refinancing
will be available on similar terms to those negotiated in 2019,
maturing in 2023. In making this viability statement, with the
current strength of underlying performance of the business and its
balance sheet, the Directors are of the view that it is reasonable
to expect the refinancing of the RCF to be available on similar
terms.
The impact of these scenarios and sensitivities has been
reviewed against the Group's projected cash flow position and
financial covenants over the three-year viability period. Should
any of these scenarios occur, clear mitigating actions are
available to ensure that the Group remains liquid and financially
viable.
Such mitigating actions available includes, but not limited to,
are reducing planned capital and marketing spend, pay and
recruitment measures, making technology and operating expenditure
cuts and utilisation of available headroom on existing debt
facilities.
Further, the Covid-19 pandemic resulted in a significant
reduction in the economic growth of the UK and Europe in 2020. The
continued potential implications of Covid-19 have been thoroughly
considered with respect to the Group's strategy through the annual
planning and budgeting process. Covid-19 will continue to be
monitored through regular and periodic reforecasts and scenario
analysis over the next twelve months and align with the three-year
outlook of this review during the 2022 financial year.
The Audit Committee reviews the output of the viability
assessment in advance of final evaluation by the Board. The
Directors have also satisfied themselves that they have the
evidence necessary to support the statement in terms of the
effectiveness of the internal control environment in place to
mitigate risk.
Having reviewed the current performance, forecasts, debt
servicing requirements, total facilities and risks, the Board has a
reasonable expectation that the Group has adequate resources to
continue in operation, meets its liabilities as they fall due,
retain sufficient available cash across all three years of the
assessment period and not breach any covenant under the debt
facilities. The Board therefore has a reasonable expectation that
the Group will remain commercially viable over the three-year
period of assessment.
*Typographical Correction:
This announcement corrects a typographical error reported in the
financial review section (Underlying Finance Charge) of the
Preliminary Results Announcement released on 13 January 2022. The
total in the Facility column of the table is corrected to
GBP738.3m. The Preliminary Results Announcement published on the
Company's website and the Annual Results Presentation have been
updated.
Notes to editors:
-- Safestore is the UK's largest self-storage group with 161
stores at 31 October 2021 comprising 128 wholly owned stores in the
UK (including 71 in London and the South East with the remainder in
key metropolitan areas such as Manchester, Birmingham, Glasgow,
Edinburgh, Liverpool, Sheffield, Leeds, Newcastle and Bristol), 29
wholly owned stores in the Paris region and four stores in
Barcelona. In addition, the Group operates eight stores in the
Netherlands and six stores in Belgium under a joint venture
agreement with Carlyle.
-- Safestore operates more self-storage sites inside the M25 and
in central Paris than any competitor providing more proximity to
customers in the wealthiest and densest UK and French markets.
-- Safestore was founded in the UK in 1998. It acquired the
French business "Une Pièce en Plus" ("UPP") in 2004 which was
founded in 1998 by the current Safestore Group CEO Frederic
Vecchioli.
-- Safestore has been listed on the London Stock Exchange since
2007. It entered the FTSE 250 index in October 2015.
-- The Group provides storage to around 80,000 personal and business customers.
-- As at 31 October 2021, Safestore had a maximum lettable area
("MLA") of 6.960 million sq ft (excluding the expansion pipeline
stores, and the Carlyle Joint Venture) of which 5.883 million sq ft
was occupied.
-- Safestore employs around 700 people in the UK, Paris and Barcelona.
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END
ACSFLFFDFTILLIF
(END) Dow Jones Newswires
February 11, 2022 12:32 ET (17:32 GMT)
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