TIDMSAFE
RNS Number : 6155C
Safestore Holdings plc
14 June 2023
14 June 2023
Safestore Holdings plc
("Safestore", "the Company" or "the Group")
Interim results for the 6 months ended 30 April 2023
A solid first half performance building on the momentum of two
record years; significant strategic progress
Key Measures 6 months 6 months Change(1) Change-CER(2)
ended ended 30
30 April April 2022
2023
----------------------------------- ---------- ------------ ---------- --------------
Underlying and Operating Metrics-
total
Revenue GBP110.1m GBP101.0m 9.0% 7.7%
Underlying EBITDA(3) GBP69.7m GBP65.2m 6.9% 5.4%
Closing Occupancy (let sq ft-
million)(4) 6.124 6.186 -1.0% n/a
Closing Occupancy (% of MLA)(5) 76.7% 80.7% -4.0ppts n/a
Average Storage Rate(6) GBP30.58 GBP29.38 4.1% 2.8%
REVPAF(16) (GBP) GBP28.28 GBP28.56 -1.0% -2.1%
Adjusted Diluted EPRA Earnings
per Share(7) 23.7p 22.5p 5.3% n/a
Free Cash flow(8) GBP31.9m GBP50.7m -37.1% n/a
EPRA NTA per Share(13) GBP9.09 GBP7.93 14.6% n/a
Underlying and Operating
Metrics- like-for-like (9)
Storage Revenue GBP87.3m GBP83.7m 4.3% 3.2%
Ancillary Revenue GBP16.2m GBP15.7m 3.2% 2.5%
Revenue GBP103.5m GBP99.4m 4.1% 3.1%
Underlying EBITDA(3) GBP66.7m GBP64.1m 4.1% 2.8%
Closing Occupancy (let sq
ft- million)(4) 5.527 5.707 -3.2% n/a
Closing Occupancy (% of MLA)(5) 78.9% 81.8% -2.9ppts n/a
Average Occupancy (let sq
ft- million)(4) 5.530 5.708 -3.1% n/a
Average Storage Rate(6) 31.84 29.59 7.6% 6.5%
REVPAF(16) (GBP) GBP29.77 GBP28.76 3.5% 2.5%
Statutory Metrics
Operating Profit(10) GBP114.9 GBP292.6m -60.7% n/a
Profit before Income Tax(10) GBP103.4m GBP285.2m -63.7% n/a
Diluted Earnings per Share 42.7p 124.5p -65.7% n/a
Dividend per Share 9.9p 9.4p 5.3% n/a
Cash Inflow from Operating GBP36.3m GBP54.7m -33.6% n/a
Activities
Diluted net assets per share(13) GBP8.45 GBP7.42 13.9% n/a
Highlights
Solid financial performance
-- Group revenue up 9.0% and in CER(2) up 7.7%
-- Group like-for-like storage revenue in CER(2) up 3.2% and
like-for-like total revenue in CER (2) up 3.1%
-- Adjusted Diluted EPRA EPS(7) , up 5.3% at 23.7p (2022: 22.5p)
-- 5.3% increase in the interim dividend to 9.9p (2022: 9.4p)
reflecting improved underlying profitability
-- Statutory profit before income tax of GBP103.4m down from
GBP285.2m in 2022 with a robust trading performance offset by the
lower gain on investment properties of GBP47.3m (2022: gain of
GBP223.9m)
-- Adjusted Diluted EPRA Earnings per Share (7) for the full
year expected to be broadly in line with the consensus of 49.45p
(17)
Operational and Strategic Progress
-- Robust like-for-like operational performance driven by continued strong rate growth
o Like-for-like revenue up 3.1% in CER(2)
-- UK up 2.7%
-- Paris up 4.3%
-- Spain up 4.7%
o Like-for-like(9) average storage rate (6) for the period up
6.5% in CER(2)
-- UK up 6.9% to GBP30.55 (2022: GBP28.57)
-- Paris up 4.1% to EUR42.02 (2022: EUR40.38)
-- Spain up 9.1% to EUR37.18 (2022: EUR34.09)
o Like-for-like(9) occupancy(4) down 2.9ppts at 78.9% (2022:
81.8%)
-- UK down 3.4ppts at 78.6% (2022: 82.0%)
-- Paris down 0.5ppts at 80.1% (2022: 80.6%)
-- Spain down 8.3ppts at 78.3% (2022: 86.6%)
-- Openings of 222,000 sq ft of new capacity across five stores
in Madrid, Barcelona, London, and Wigan in addition to a store
extension completion in London-Crayford of 9,000 sq ft.
-- Total Group development and extension pipeline of 30 stores
and 1.5m sq ft representing c. 18% of the existing portfolio
-- New development or extension sites in the period acquired or
identified in Barcelona, Madrid, London-Charlton, and Ellesmere
Port adding 193,000 sq ft of future MLA
-- Purchases of the freehold interests of two stores in Barcelona and Manchester
-- Lease extensions completed for three stores in Edinburgh, London, and Burnley
-- Entry into German market via a new Joint Venture ("JV") with
Carlyle which has acquired the seven-store myStorage business with
326,000 sq ft of MLA(5)
-- Acquisition of 58,000 sq ft existing storage facility in Apeldoorn in the Netherlands
Strong and Flexible Balance Sheet
-- Group loan-to-value ratio ("LTV"(11) ) at 25.3% (2022: 24.8%)
and interest cover ratio ("ICR"(12) ) at 10.8x (2022: 10.0x)
-- Unutilised bank facilities of GBP227.1m at 30 April 2023 (2022: GBP198.5m)
Frederic Vecchioli, Safestore's Chief Executive Officer,
commented:
"I am glad to report a solid performance in the period with
strong average storage rates driving the results of our UK, French
and Spanish businesses, with revenue increasing 9.0% from GBP101.0m
to GBP110.1m. The performance is all the more pleasing as it builds
on two record financial years. We are confident that our focus on
balancing occupancy and rate to drive revenue per available foot
(REVPAF), which has grown by 19.4% over the last three years, will
continue to serve us well and drive shareholder value.
Over the last six months the Group has opened or extended six
new stores, added a further five new developments or extensions to
the pipeline, extended the leases on three stores, acquired the
freeholds of two stores, acquired an existing store in the
Netherlands and entered the German market through a new JV with
Carlyle.
Over the last seven years, the Group has now developed or
acquired 72 stores and expanded into four new countries
(Netherlands, Belgium, Spain and now Germany) leveraging and
improving our platform and central functions while managing
investment risk very carefully. In addition, our development
pipeline of 30 new stores, extensions, and projects represents a
further c. 18% of our existing portfolio's MLA. Throughout this
period of expansion, the Group has maintained its disciplined
approach to return on capital.
Our strong and flexible balance sheet has been significantly
enhanced by the agreement of a new unsecured four-year GBP400
million multi-currency RCF in November 2022 which increases funding
capacity, allowing us to continue to consider strategic,
value-accretive investments as and when they arise.
We have delivered a strong occupancy performance over recent
years and, after a significant level of acquisition and development
activity over the last six years, we still have 1.9m sq ft of fully
invested currently unlet space in our UK, Paris, Spain and Benelux
markets in addition to 1.5m sq ft of pipeline space. Our most
significant upside opportunity is from filling our existing unlet
space at appropriate rates and that remains our priority. The
business has demonstrated its inherent resilience and, despite the
challenging macroeconomic environment, we are confident in the
future of the business.
The underlying fundamentals of the European self storage
industry with limited supply, strong barriers to entry and a
steadily growing product awareness are as strong as ever. Over the
last ten years, Safestore has delivered a market leading 17.3% CAGR
of its adjusted diluted EPRA Earnings per Share(7) and I'm
confident that Safestore will continue to play a leading role in
the development of the self storage industry across Europe,
delivering significant further value to its stakeholders.
The first six month's trading performance has provided us with a
solid base for the rest of the financial year and, as we enter the
peak season of trading, we anticipate that the business should
deliver Adjusted Diluted EPRA Earnings per Share(7) for 2022/23
broadly in line with the consensus of analysts' forecasts of
49.45p(17) .
None of this would be possible without the dedication and skills
of our teams and I would like to thank all our colleagues in the
UK, France, Spain, the Netherlands and Belgium for their
performance so far in 2023 as well as their commitment and loyalty.
We are appreciative of their efforts."
Notes
We prepare our financial statements using IFRS. However, we also
use a number of adjusted measures in assessing and managing the
performance of the business. These measures are not defined under
IFRS and they may not be directly comparable with other companies'
adjusted measures and are not intended to be a substitute for, or
superior to, any IFRS measures of performance. These include
like-for-like figures, to aid in the comparability of the
underlying business as they exclude the impact on results of
purchased, sold, opened or closed stores; and constant exchange
rate (CER) figures are provided in order to present results on a
more comparable basis, removing FX movements. These metrics have
been disclosed because management review and monitor performance of
the business on this basis. We have also included a number of
measures defined by EPRA, which are designed to enhance
transparency and comparability across the European Real Estate
sector, see notes 7 and 13 below and "Non-GAAP financial
information" in the notes to the financial statements.
1 - Where reported amounts are presented either to the nearest
GBP0.1m or to the nearest 10,000 sq ft, the effect of rounding may
impact the reported percentage change.
2 - CER is Constant Exchange Rates (Euro denominated results for
the current period have been retranslated at the exchange rate
effective for the comparative period. Euro denominated results for
the comparative period are translated at the exchange rates
effective in that period. This is performed in order to present the
reported results for the current period on a more comparable
basis).
3 - Underlying EBITDA is defined as Operating Profit before
exceptional items, share-based payments, corporate transaction
costs, change in fair value of derivatives, gain/loss on investment
properties, variable lease payments, depreciation and the share of
associate's depreciation, interest and tax. Underlying EBITDA
therefore excludes all leasehold rent charges. Underlying profit
before tax is defined as underlying EBITDA less leasehold rent,
depreciation charged on property, plant and equipment and net
finance charges relating to bank loans and cash.
4 - Occupancy excludes offices but includes bulk tenancy. As at
30 April 2023, closing occupancy includes 18,000 sq ft of bulk
tenancy (30 April 2022: 14,000 sq ft).
5 - MLA is Maximum Lettable Area. At 30 April 2023, Group MLA
was 7.99m sq ft (30 April 2022: 7.67m sq ft).
6 - Average Storage Rate is calculated as the revenue generated
from self storage revenues divided by the average square footage
occupied during the period in question.
7 - Adjusted Diluted EPRA EPS is based on the European Public
Real Estate Association's definition of Earnings and is defined as
profit or loss for the period after tax but excluding corporate
transaction costs, change in fair value of derivatives, gain/loss
on investment properties and the associated tax impacts. The
Company then makes further adjustments for the impact of
exceptional items, IFRS 2 share-based payment charges, exceptional
tax items, and deferred tax charges. This adjusted earnings is
divided by the diluted number of shares. The IFRS 2 cost is
excluded as it is written back to distributable reserves and is a
non-cash item (with the exception of the associated National
Insurance element). Therefore, neither the Company's ability to
distribute nor pay dividends are impacted (with the exception of
the associated National Insurance element). The financial
statements will disclose earnings on a statutory, EPRA and Adjusted
Diluted EPRA basis and will provide a full reconciliation of the
differences in the financial year in which any LTIP awards may
vest.
8 - Free cash flow is defined as cash flow before investing and
financing activities but after leasehold rent payments.
9 - Like-for-like adjustments remove the impact of the 2023
acquisition of Apeldoorn, the 2023 openings of Wigan,
London-Morden, North Barcelona, South Madrid and North Madrid, the
2022 acquisition of the Netherlands and Belgium Joint Venture, the
2022 acquisition of Christchurch, and the 2022 openings of
London-Bow and South Madrid Central Barcelona
10 - Operating profit decreased by GBP177.7m to GBP114.9m (30
April 2022: GBP292.6m) compared to last year, principally as a
result of a decrease in the gain on Investment properties of
GBP176.6m to GBP47.3m (30 April 2022: GBP223.9m) and an increase of
GBP4.5m in Underlying EBITDA as a result of stronger trading
performance. It should be noted, in the prior period, Profit before
income tax additionally included exceptional items of GBP10.5m,
being other exceptional gains. GBP5.5m relating to the valuation
gain recognised on the 20% equity investment held in the joint
venture with CERF, when the Group acquired the remaining 80% on 30
March 2022. Further, GBP5.0m related to the net gain on disposal of
the Nanterre site in Paris in November 2021
11 - LTV ratio is Loan-to-Value ratio, which is defined as net
debt (excluding lease liabilities) as a proportion of the valuation
of investment properties and investment properties under
construction (excluding lease liabilities). At 30 April 2023, the
Group LTV ratio was 25.3%. (31 October 2022: 23.6%)
12 - ICR is interest cover ratio and is calculated as the ratio
of underlying EBITDA after leasehold rent to underlying finance
charges.
13 - EPRA's Best Practices Recommendations guidelines for Net
Asset Value ("NAV") metrics are EPRA Net Tangible Assets ("NTA"),
EPRA Net Reinstatement Value ("NRV") and EPRA Net Disposal Value
("NDV"). EPRA NTA is considered to be the most relevant measure for
the Group's business which provides sustainable long term
progressive returns and is now the primary measure of net assets.
The basis of calculation, including a reconciliation to reported
net assets, is set out in note 15.
14 - On 30 March 2022, the Group acquired the remaining 80% of
the Joint Venture with CERF. Prior to acquiring the 80%, the Joint
Venture with CERF, which represented a 20% investment, was
accounted for as an associate using the equity method of
accounting, as described in the "Investment in associates" note to
the financial statements.
15 - On 1 December 2022, the Group made an initial investment
into a new joint venture with Carlyle, to enter the German self
storage market, of c. EUR2.2 million for a 10% share. The Group
will also earn a fee for providing management services to the joint
venture.
16 - REVPAF is a new alternative performance measure used by the
business. REVPAF stands for Revenue per Available Square Foot and
is calculated by dividing revenue for the period by weighted
average available square feet for the same period.
17 - As at the date of publication, the consensus of 10
analysts' forecasts of Adjusted EPRA EPS was 49.45p and the range
of forecasts was from 47.3p to 51.7p
Reconciliations between underlying metrics and statutory metrics
can be found in the financial review and financial statements
sections of this announcement.
Summary
Safestore has delivered a solid financial performance in the
first half of the financial year, driven by strong average achieved
storage rates(6) . Reported Group revenue increased 7.7% at CER(2)
with like-for-like(9) revenue at CER(2) growing by 3.1%. The
Group's like-for-like average storage rate at CER(2) grew by 6.5%
with like-for-like average occupancy(4) down by 3.1%. Profit before
income tax decreased to GBP103.4m from GBP285.2m in 2022 as a
result of the lower gain on investment properties of GBP47.3m
(2022: gain of GBP223.9m) offset by the increase in underlying
trading performance of GBP4.5m.
Our operational performance across the UK has been resilient in
the period resulting in a 2.7% increase in like-for-like(9)
revenue. Average storage rate, driven by our industry leading
digital marketing platform, enquiry generation and store team
conversion, has again performed well, particularly considering the
strength of the prior year performance, delivering growth of 6.9%
in the period on a like-for-like basis to GBP30.55 (2022:
GBP28.57). Like-for-like(9) closing occupancy(4) at the period end
was down 3.4ppts at 78.6% (2022: 82.0%). Total UK revenue growth of
3.5% reflected the strong like-for-like performance, the 2023
openings of Wigan and London-Morden, the 2022 acquisition of
Christchurch, and the 2022 opening of London-Bow.
In Paris, our trading performance was strong with revenue
growing by 4.3%. This was driven by our average rate performance
which increased by 4.1% compared to the prior year with average
occupancy growing by 0.7%. Closing occupancy(4) at the period end
was down 0.5ppts at 80.1% (2022: 80.6%).
Our Spanish business, which was acquired in December 2019,
contributed EUR1.80m of like-for-like revenue, up 4.7% compared to
the prior year. This was driven by like-for-like average rate
growth of 9.1% compared to the prior year, with the average
like-for-like storage rate(6) increasing to EUR37.18 (2022:
EUR34.09). This was offset by a reduction in like-for-like average
occupancy of 6.5%. Closing like-for-like occupancy(4) was down
8.3ppts at 78.3% (2022: 86.6%). Ancillary revenues, an area of
particular focus, continue to improve.
Group underlying EBITDA of GBP69.7m increased 5.4% at CER(2) on
the prior year and 6.9% on a reported basis, reflecting the impact
of the 4.3% weakening of the average Sterling to Euro exchange
rate, compared to the prior period, on the profit earned on our
Paris, Spain and Benelux businesses. Adjusted diluted EPRA EPS(7)
grew by 5.3% in the period to 23.7p (2022: 22.5p).
Our property portfolio valuation (excluding investment
properties under construction) has increased by GBP128.8m since
October 2022 to GBP2,586.6m. The increase comprises GBP63.1m of
additions and reclassifications, a positive currency impact of
GBP13.4m and a GBP52.3m revaluation gain (equivalent to 2.1% of the
valuation at October 2022) . The Group's external valuers, Cushman
& Wakefield Debenham Tie Leung Limited ("C&W"), valued 43%
of the portfolio at April 2023 with a Directors' valuation being
carried out, with the assistance of C&W, on the remaining
57%.
Reflecting the Group's robust trading performance, the Board is
pleased to recommend a 5.3% increase in the interim dividend to
9.9p per share (2022: 9.4p).
Outlook
Enquiry levels in the UK, whilst significantly ahead of
pre-pandemic levels, were slightly below prior year levels in the
UK in May but have showed some improvement in June. In our
continental European business, enquiry levels have been ahead of
prior year in May and June.
Group revenue for May 2023 grew by 3.9% (CER) compared to May
2022 and by 2.2% on like-for-like CER(2) basis.
Our business has proved itself to be resilient with multiple
drivers of demand and, despite the current macro-economic
challenges, we believe the Group, whilst not entirely immune from
any cost of living or inflationary issues, is well positioned to
withstand any downturn. At present, Adjusted Diluted EPRA earnings
per share for the full year is anticipated to be broadly in line
with consensus(17) .
For further information, please contact:
Safestore Holdings PLC
Frederic Vecchioli, Chief Executive via Instinctif Partners
Officer
Andy Jones, Chief Financial
Officer
www.safestore.com
Instinctif Partners
Guy Scarborough/ Bryn Woodward 07917 178920/ 07739 342009
A conference call for analysts will be held at 9:30am today.
For dial-in details of the presentation please contact:
Guy Scarborough ( guy.scarborough@instinctif.com or telephone on
07917 178920) .
Notes to Editors
-- Safestore is the UK's largest self storage group with 185
stores on 30 April 2023, comprising 132 wholly owned stores in the
UK (including 73 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, 8 stores in Spain, 10
stores in the Netherlands and 6 stores in Belgium.
-- 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 more densely populated 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 90,000 personal and business customers.
-- As at 30 April 2023, Safestore had a maximum lettable area
("MLA") of 7.990 million sq ft (excluding the expansion pipeline
stores) of which 6.124 million sq ft was occupied.
-- Safestore employs around 750 people in the UK, Paris, Spain, the Netherlands and Belgium.
Our Strategy
The Group intends to continue to deliver on its proven strategy
of leveraging its well-located asset base, management expertise,
infrastructure, scale and balance sheet strength and further
increase its Earnings per Share by:
-- Optimising the trading performance of the existing portfolio;
-- Maintaining a strong and flexible capital structure; and
-- Taking advantage of selective portfolio management and
expansion opportunities in our existing markets and, if
appropriate, in attractive new geographies either through a joint
venture (14/15) or in our own right.
In addition, the Group's strategy is pursued whilst maintaining
a strong focus on Environmental, Social and Governance ("ESG")
matters and a summary of our ESG strategy is provided further
on.
Optimisation of Portfolio
With the opening of 25 new stores since August 2016, and the
acquisitions of 47 stores through the purchases of Space Maker in
July 2016, Alligator in November 2017, our Heathrow store, Fort Box
in London and OMB in Barcelona in 2019, Your Room in 2021, the
Benelux JV in 2022 and Apeldoorn in 2023, we have established and
strengthened our market-leading portfolio in the UK and Paris and
have entered the Spanish, Netherlands and Belgium markets. We have
a high quality, fully invested estate in all geographies and, of
our 185 stores as at 30 April 2023, 102 are in London and the South
East of England or in Paris, with 59 in other major UK cities and
24 in Barcelona and the Benelux region. In the UK, we now operate
50 stores within the M25, which represents a higher number of
stores than any other competitor. In addition, we recently entered
a sixth market via a Joint Venture with Carlyle which acquired the
seven-store German self storage group myStorage.
Our MLA(5) has increased to 8.0m sq ft at 30 April 2023 (FY2022:
7.7m sq ft). At the current occupancy level of 78.9% on a
like-for-like basis, we have 1.9m sq ft of fully invested
unoccupied space (3.4m sq ft including the development pipeline),
of which 1.3m sq ft is in our UK stores, 0.3m sq ft is in Paris and
0.3m sq ft is in Spain and Benelux. In total, unlet space at our
existing stores is the equivalent of c. 47 empty stores located
across the estate and provides the Group with significant
opportunity to grow further. We have a proven track record of
filling our vacant space at efficiently managed rates so we view
this availability of space with considerable optimism. We will also
benefit from the operational leverage from the fact that this
available space is fully invested and the related operating costs
are essentially fixed and already included in the Group cost base.
Our continued focus will be on ensuring that we drive occupancy to
utilise this capacity at carefully managed rates. From full year
2013 to half year 2023, occupancy of the stores in the portfolio in
2013 that remain in the Group today has increased from 63.1% to
81.5%, i.e., an average of 1.9ppts per year and equivalent to a
total of 1.0m sq ft.
There are three elements that are critical to the optimisation
of our existing portfolio:
-- Enquiry generation through an effective and efficient marketing operation;
-- Strong conversion of enquiries into new lets; and
-- Disciplined central revenue management and cost control.
Digital Marketing Expertise- UK Number 1 Self Storage Brand
Awareness of self storage remains relatively low with half of
the UK population either knowing very little or nothing about self
storage (source: SSA Annual Report 2023). In the UK, many of our
new customers are using self storage for the first time and it is
largely a brand-blind purchase. Typically, customers requiring
storage start their journey by conducting online research using
generic keywords in their locality (e.g. "storage in Borehamwood",
"self storage near me") which means that geographic coverage and
search engine prominence remain key competitive advantages.
We believe there is a clear benefit of scale in the generation
of customer enquiries. The Group has continued to invest in
technology and in-house expertise which has resulted in the
development of a leading digital marketing platform that has
generated 46% enquiry growth for the Group over the last five
years, an annual growth of 8%. Our in-house expertise and
significant annual budget have enabled us to deliver strong
results. Safestore is the UK number 1 self storage brand as it has
more new lets per year than any other brand.
The Group's online strength came to the fore during the various
Covid-19 lockdowns and has since continued to be the predominant
channel for customer acquisition. Online enquiries in the first
half of this year made up 89% of all our enquiries in the UK
(H12022: 90%), with 84% in France (H12022: 85%). The majority of
our online enquiries now originate from a mobile device (69% share
in UK for H12023, H12022: 65.5%), highlighting the need for
continual investment in our responsive web platform for a
"mobile-first" world. We continue to invest in activities that
promote a strong search engine presence to grow enquiry volume
whilst managing efficiency in terms of overall cost per enquiry and
cost per new let. Group marketing costs for the half year as a
percentage of revenue were in line with the previous year at 3.6%
(H12022: 3.5%).
During H1 2023, the Group demonstrated its ability to integrate
newly developed and acquired stores into its marketing platform
with successful new openings at Morden (London) and Wigan in the
UK, North Barcelona, North Madrid and South Madrid in Spain and
Apeldoorn in the Netherlands. We have clearly demonstrated that our
marketing platform is transferrable into multiple overseas
geographies.
Motivated and effective store teams benefiting from investment
in training and development
Training, People and Performance Management
In what is still a relatively immature and poorly understood
market, customer service and selling skills at the point of sale
remain essential in earning the trust of the customer and in
driving the appropriate balance of volumes and unit price in order
to optimise revenue growth in each store.
Our enthusiastic, well-trained, and customer-centric sales team
remains a key differentiator and a strength of our business.
Understanding the needs of our customers and using this knowledge
to develop trusted in-store advisors is a fundamental part of
driving revenue growth and market share.
Safestore has been an Investors in People ("IIP") accredited
organisation since 2003 and we passionately believe that our
continued success is dependent on our highly motivated and
well-trained colleagues. Following the award of a Bronze
accreditation in 2015 and a Gold accreditation in 2018, we were
delighted to be awarded the "we invest in people" Platinum
accreditation in February 2021. This is the highest accolade in the
Investors in People scale and positions us as an employer of
choice. Shortly after our Platinum accreditation, we were
shortlisted for the Platinum Employer of the Year (250+) category
in the Investors in People Awards 2021. This further endorses the
high standard of our teams and the people development programmes
that drive our skill and talent retention.
IIP is the international standard for people management,
defining what it takes to lead, support, and engage people
effectively to achieve sustainable results. Underpinning the
standard is the Investors in People framework, reflecting the
latest workplace trends, essential skills and effective structures
required to outperform in any industry. Investors in People enables
organisations to benchmark against the best in the business on an
international scale. We are proud to have our colleagues recognised
to such a high standard, not only in our industry, but also across
over 50,000 organisations in 66 countries. This sustained people
engagement focus is an essential component of our continuous
improvement mentality.
We are committed to growing and rewarding our people and we
tailor our development, reward and recognition programmes to
reflect this. Our IIP recognised coaching programme, launched in
2018 and upgraded every year since, continues to be a driving force
behind the continuous performance improvement demonstrated by our
store colleagues.
Our online learning portal, combined with the energy and
flexibility of our store colleagues, allows us to not only continue
to deliver our award-winning development programmes but also to
capitalise on the strength of our IT platforms. We have been able
to combine our newly created technology communication skills with
our tried and tested face-to-face training sessions in a newly
created "impact" sales refresher.
We have always aimed to recognise the changing needs and demands
of our customers. Combining new, along with tried and tested,
solutions and systems, we are further able to support our store
colleagues, allowing them to fulfil the needs of our customers over
and above that of our competitors. Our flexible contract types and
enhanced digital contract completion further enhance our customer
offer and experience. These enhancements have combined to help us
create our 2023 QUEST programme which commenced roll-out in late
September 2022 focusing on the new contract types and technologies
available to us.
All new recruits to the business benefit from enhanced induction
and training tools that have been developed in-house and enable us
to quickly identify high-potential individuals and increase their
speed to competency. They receive individual performance targets
within four weeks of joining the business and are placed on the
"pay-for-skills" programme that allows accelerated basic pay
increases dependent on success in demonstrating specific and
defined skills. The key target of our programme remains that we
grow our talent through our Store Manager Development programme,
and we are pleased with our progress to date.
Our internal Store Manager Development programme has been in
place since 2016 and is a key part of succession planning for
future Store Managers. In May 2022, we began our assessment process
for the sixth intake of the SMD (Store Manager Development
programme) with a first-class group of candidates ready to learn
the necessary skills and attributes they need to become a Safestore
Store Manager. Funded by the Apprenticeship Levy this programme
provides the opportunity to complete a Level 3 Management and
Leadership apprenticeship, with the additional opportunity to
complete an Institute of Leadership and Management ("ILM")
qualification. The group are due to graduate in the third quarter
of 2023.
Our Store Manager Development programme demonstrates the
effectiveness of our learning tools. In a spirit of constant
improvement, our content and delivery process is dynamically
enhanced through our 360-degree feedback process utilising the
learnings from not only the candidates but also from our training
Store Managers and senior business leaders. This allows our people
to be trained with the knowledge and skills to sell effectively in
today's marketplace.
Our Senior Manager Development programme ("LEAD") focuses on
developing our high performing store managers, aimed at preparing
them for more senior roles within the business. This programme is
built on the foundations of our Store Manager Development programme
and included delegates delivering performance-enhancing projects to
our wider business. We are proud that all nine participants of our
Senior Leadership Development programme (LEAD Academy) successfully
completed their Level 5 Management and Leadership apprenticeship;
six of those participants were awarded Distinctions.
Furthermore, we have re-launched our Graduate programme, with
our first intake commencing in October 2022, providing an
opportunity for newly qualified graduates to build their skillset
and experience resulting in a career with Safestore.
Our performance dashboard allows our store and field teams to
focus on the key operating metrics of the business providing an
appropriate level of management information to enable swift
decision making. Reporting performance down to individual colleague
level enhances our competitive approach to team and individual
performance. We continue to reward our people for their performance
with bonuses of up to 50% of basic salary based on their
achievements against individual targets for new lets, occupancy,
and ancillary sales. In addition, our Values and Behaviours
framework is overlaid on individuals' performance in order to
assess performance and development needs on a quarterly basis.
Our "Make the Difference" people forum, launched in 2018,
enables frequent opportunities for us to hear and respond to our
colleagues. Our network of 15 "People Champions" collect questions
and feedback from their peers across the business and put them to
members of the Executive Committee. We drive change and continuous
improvement in responding to the feedback we receive for "Our
Business, Our Customers and Our Colleagues".
People Champions:
-- Consult and collect the views and suggestions of all colleagues that they represent;
-- Engage in the bi-annual "Make the Difference" people forum,
raising and representing the views of their colleagues; and
-- Consult with and discuss feedback with management and the leadership team at Safestore.
Our values are authentic, having been created by our people.
They are core to the employment life cycle and bring consistency to
our culture. Our leaders have high values alignment enabling us to
make the right decisions for our colleagues and our customers.
Our customers continue to be at the heart of everything we do,
whether it be in store, online or in their communities. Our
commitment to our customers mirrors that of our commitment to our
colleagues.
Technological Developments
After delivering the appropriate technology the Group recently
opened its first fully automated, unmanned, satellite self storage
centre in Christchurch. Utilising industry leading automated
technology, along with in-house created communication and control
technologies, customers can securely enter the building and their
storage unit from a simple app on their mobile phone. Our in-house
created video portal allows customers to instantly talk to a
Safestore colleague at any time from a help screen located in the
building. The portal also allows the customer to access services
and products directly from the store, with or without the support
of a Safestore colleague. Several additional unmanned satellite
stores are currently under various stages of development in the
UK.
The Group's customers also have the option to contract remotely
for their unit in any UK store. The Group's belief is that its
multi-channel sales strategy with either full automation or
combined with human interaction through our store sales teams, our
call centre and the National Accounts team provide each type of
customer with the most tailored and easy way to buy self storage at
Safestore.
Customer Satisfaction
In February 2023, Safestore UK won the Feefo Platinum Trusted
Service award for the fourth time. The award is given to businesses
which have achieved Gold standard for three consecutive years. It
is an independent mark of excellence that recognises businesses for
delivering exceptional experiences, as rated by real customers. In
addition to using Feefo, Safestore invites customers to leave a
review on a number of review platforms, including Google and
Trustpilot. Our ratings for each of these three providers in the UK
are between 4.6 and 4.8 out of 5. In France, Une Pièce en Plus uses
Trustpilot to obtain independent customer reviews and in H12023
achieved a "TrustScore" of 4.6 out of 5. In Spain, OMB collects
customer feedback via Google reviews and has maintained a score of
4.6 out of 5.
Central Revenue Management and Cost Control
We continue to pursue a balanced approach to revenue management.
We aim to optimise REVPAF by improving the utilisation of the
available space in our portfolio at carefully managed rates. Our
central pricing team is responsible for the management of our
dynamic pricing policy, the implementation of promotional offers
and the identification of additional ancillary revenue
opportunities. Whilst price lists are managed centrally and are
adjusted on a real-time basis, the store sales teams have, from
time to time, the ability to offer a Lowest Price Guarantee in the
event that a local competitor is offering a lower price, or the
ability to offer discretionary discounts. The Lowest Price
Guarantee and discretionary discount are centrally controlled and
activated on a store by store and unit by unit basis.
Average rates are predominantly influenced by:
-- The store location and catchment area;
-- The volume of enquiries generated online;
-- The store team skills at converting these enquiries into new
lets at the expected price; and
-- The very granular pricing policy and the confidence provided
by analytical capabilities and systems that smaller players might
lack.
We believe that Safestore has a very strong proposition in each
of these areas.
Costs are managed centrally with a lean structure maintained at
Head Office. Enhancements to cost control are continually
considered and, particularly in the context of the current
inflationary environment, the cost base is challenged on an ongoing
basis.
Strong and Flexible Capital Structure
Since 2014 we have refinanced the business on seven occasions,
each time optimising our debt structure and improving terms; and
believe we have maintained a capital structure that is appropriate
for our business and which provides us with the flexibility to take
advantage of carefully evaluated development and acquisition
opportunities.
At 30 April 2023, based on the current level of borrowings and
interest swap rates, the Group's weighted average cost of debt was
2.77% and 84% of our drawn debt was at fixed rate or hedged (H1
2022: 2.30% and 95% respectively). The weighted average maturity of
the Group's drawn debt is 5.4 years at the current period end and
the Group's LTV ratio is 25.3% as at 30 April 2023.
This LTV of 25.3% and interest cover ratio of 10.8x for the
rolling twelve-month period ended 30 April 2023 provides us with
significant headroom compared to our banking covenants (LTV of 60%
and ICR of 2.4:1). We had GBP227.1 million of undrawn bank
facilities at 30 April 2023 before taking into consideration the
additional GBP100 million uncommitted accordion facility.
Taking into account the improvements we have made in the
performance of the business, the Group is capable of generating
free cash after dividends sufficient to fund the building of three
to four new stores per annum depending on location and availability
of land.
The Group evaluates development and acquisition opportunities in
a careful and disciplined manner against rigorous investment
criteria. Our investment policy requires certain Board-approved
hurdle rates to be considered achievable prior to progressing an
investment opportunity. In addition, the Group aims to maintain a
Group LTV(11) ratio below 40% which the Board considers to be
appropriate for the Group.
Recent refinancing
In November 2022, the Group completed the refinancing of its
Revolving Credit Facilities ("RCFs") which were due to expire in
June 2023.
The previous GBP250 million Sterling and EUR70 million Euro
secured RCFs have been replaced with a single multi-currency
unsecured GBP400 million facility. In addition, a further GBP100
million uncommitted accordion facility is incorporated into the
facility agreement.
The facility is for a four-year term with two one-year extension
options exercisable after the first and second years of the
agreement.
The Group will pay interest at a margin of 1.25% plus SONIA or
Euribor depending on whether the borrowings are drawn in Sterling
or Euros. The margin is at the same level as the previous facility
agreements.
Environmental , Social and Governance (" ESG ") KPIs have been
agreed with the Group's lenders. The margin under the facility is
now linked to ESG targets, which where met enable a reduction in
the margin of up to 5bps to 120bps.
A commitment fee of 35% of the margin is payable on undrawn
amounts under the facility. This has reduced from 40% under the
previous facility agreements.
Reflecting the Group's improved credit profile, the banking
group and existing US Private Placement Noteholders have agreed
that all of the Group's previously secured borrowings move to an
unsecured basis, thus reducing administrative and legal costs
associated with the facilities.
The main covenants under all of the Group's borrowings are a
Group Loan-to-value ("LTV") covenant of 60% (replacing separate UK
and French LTV covenants) which is based on net debt rather than
gross debt and an Interest Cover Ratio covenant of 2.4x.
The hedging arrangements under the previous facility agreements
have been continued under the new agreements. Therefore, the Group
benefits from GBP55 million of Interest Rate Swaps until 30 June
2023 at a rate of 0.6885%
ESG Strategy
ESG: Sustainable Self Storage
Our purpose - to add stakeholder value by developing profitable
and sustainable spaces that allow individuals, businesses and local
communities to thrive - is supported by the "pillars" of our
sustainability strategy: our people, our customers, our community
and our environment. In addition, the Group and its stakeholders
recognise that its efforts are part of a broader movement and we
have, therefore, aligned our objectives with the UN Sustainable
Development Goals ("SDGs"). We reviewed the significance of each
goal to our business and the importance of each goal to our
stakeholders and assessed our ability to contribute to each goal.
Following this materiality exercise, we have chosen to focus our
efforts in the areas where we can have a meaningful impact. These
are "Decent work and economic growth" (goal 8), "Sustainable cities
and communities" (goal 11), "Responsible consumption and
production" (goal 12) and "Climate action" (goal 13).
Sustainability is embedded into day-to-day responsibilities at
Safestore and, accordingly, we have opted for a governance
structure which reflects this. Two members of the Executive
Management team co-chair a cross-functional sustainability group
consisting of the functional leads responsible for each area of the
business.
In 2018, the Group established medium-term targets in each of
the "pillars" towards which the Group continued to progress in
H12023.
Our people: Safestore was awarded the prestigious Investors in
People ("IIP") Platinum accreditation and was in the final top ten
shortlist for Platinum Employer of the Year (250+) category in The
Investors in People Awards 2021. The Group's response during the
pandemic lockdowns and aftermath has had a profound impact on trust
in leadership and colleague engagement and motivation.
Our customers : The Group's brands continue to deliver a
high-quality experience, from online enquiry to move-in. This is
reflected in customer satisfaction scores on independent review
platforms (Trustpilot, Feefo, Google) of over 90% in each market.
The introduction of digital contracts during the pandemic offers
both customer convenience and a reduction in printing, saving an
estimated 44,000 pieces of paper each month.
Our community: Safestore remains committed to being a
responsible business by making a positive contribution within the
local communities wherever our stores are based. We continue to do
this by developing brownfield sites and actively engaging with
local communities when we establish a new store, identifying and
implementing greener approaches in the way we build and operate our
stores, helping charities and communities to make better use of
limited space, and creating and sustaining local employment
opportunities directly and indirectly through the many small and
medium-sized enterprises which use our space. During FY2022, the
space occupied by local charities in 222 units across 103 stores
was 18,903 sq ft and worth GBP0.7 million.
Our environment: Safestore is committed to ensuring our
buildings are constructed responsibly and their ongoing operation
has a minimal impact on local communities and the environment. It
should be noted that the self storage sector is not a significant
consumer of energy when compared with other real estate
sub-sectors. As a result, operational emissions intensity tends to
be far lower. According to a 2021 report by KPMG and EPRA, self
storage generates the lowest greenhouse gas emissions intensity
(5.75 kg/m(2) for scope 1 and 2) of all European real estate
sub-sectors, with emissions per m(2) less than 30% of the European
listed real estate average (19.5 kg/m(2) ) and notably 21% of the
emissions intensity of the residential sub-sector (27.0 kg/m(2) ).
Reflecting the considerable progress made on energy mix, efficiency
measures and waste reduction to date, Safestore's emissions
intensity (3.9 kg/m(2) in 2020) is considerably lower (-32%) than
the self storage sub-sector average. In FY2022, the Group continued
to progress with a further 2.7% decline in absolute emissions
despite continued portfolio growth and greater utilisation of
stores compared to 2021. Safestore's absolute (location-based)
emissions are now 54% below, and emissions intensity 68% below, the
2013 baseline level despite significant growth in portfolio floor
space. Moving forward, the Group has a commitment to be
operationally carbon neutral by 2035 with a medium-term target to
reduce operational emissions (market-based) by 50% compared to the
level in FY2021 by 2025. The total investment to achieve carbon
neutrality should be around GBP3 million.
In addition to the IIP award and the customer satisfaction
ratings, the Group has received recognition for its sustainability
progress and disclosures in the last twelve months. Safestore has
been given a Silver rating in the 2022 EPRA Sustainability BPR
awards. The Global ESG Benchmark for Real Assets ("GRESB") has once
again awarded Safestore an "A" rating in its 2022 Public
Disclosures assessment. MSCI has awarded Safestore its
second-highest rating of "AA" for ESG in 2022. The Group has also
been awarded the highest rating of five stars by "Support the
Goals".
Finally, the Group has worked with its banking lenders to agree
ESG related KPIs which are linked to the margin payable under its
new GBP400 million facility. Two KPI's have been agreed, which,
when achieved, result in a reduction in margin of up to 5bps.
Portfolio Management
Our approach to store development and acquisitions in the UK,
Paris, Spain, the Netherlands, Belgium and, through our Joint
Venture with Carlyle, in Germany, continues to be pragmatic,
flexible and focused on the return on capital.
Our experienced and skilled property teams in all geographies
continue to seek investment opportunities in new sites to add to
the store pipeline. However, investments will only be made if they
comply with our disciplined and strict investment criteria. Our
preference is to acquire sites that are capable of being fully
operational within 18-24 months from completion.
Since 2016, the Group has opened 25 new stores: Chiswick,
Wandsworth, Mitcham, Paddington Marble Arch, Carshalton, Bow,
Morden (all in London), Birmingham Central, Birmingham Merry Hill,
Birmingham Middleway, Altrincham, Peterborough, Gateshead,
Sheffield and Wigan in the UK, and Emerainville, Combs-la-Ville,
Poissy, Pontoise and Magenta in Paris, Nijmegen in the Netherlands
and Central Barcelona, North Madrid, South Madrid and North
Barcelona in Spain, adding 1,232,000 sq ft of MLA.
In addition, the Group has acquired 47 existing stores through
the acquisitions of Space Maker, Alligator, Fort Box, Salus and
Your Room in the UK, OhMyBox! in Barcelona, the Lokabox and M3
group from our Benelux JV acquisition, and Apeldoorn in the
Netherlands. These acquisitions added a further 1,905,000 sq ft of
MLA and revenue performance has been enhanced in all cases under
the Group's ownership.
We have also completed the extensions and refurbishments of our
Acton, Barking, Bedford, Chingford, Wimbledon, Edgware, Southend,
Paddington Marble Arch, Winchester, Crayford and Longpont (Paris)
stores adding a net 131,000 sq ft of fully invested space to the
estate. All of these stores are performing in line with or ahead of
their business plans.
The Group's current pipeline of new developments and store
extensions (see below) has grown significantly over the last year
and now constitutes c. 1,455,000 sq ft of future MLA. The pipeline
is equivalent to c. 18% of the existing portfolio. The outstanding
capital expenditure of GBP134 million is expected to be funded from
the Group's existing resources.
Property Pipeline
Openings of New Stores and Extensions in the period
Open 2023 FH/LH Opening Date MLA Other
------------------- ------ ------------- ------- -----------
Redevelopments and Extensions
----------------------------------------------------------------
London- Crayford LH Q2 2023 9,400 Extension
New Developments
----------------------------------------------------------------
London- Morden FH Q2 2023 52,000 New build
Wigan FH Q2 2023 42,700 Conversion
Northern Madrid FH Q1 2023 53,000 Conversion
Southern Madrid FH Q1 2023 32,000 Conversion
Northern Barcelona FH Q2 2023 42,000 Conversion
UK
In May 2022, the Group completed the acquisition of a 2.1-acre
freehold site including an existing warehouse in Wigan in Greater
Manchester. A 42,700 sq ft MLA store in opened in February
2023.
In September 2019 the Group acquired a freehold 0.9-acre site in
Morden in London in an established industrial location. A 52,000 sq
ft self storage facility opened in March 2023.
In Crayford, we secured a leasehold site on which we have
converted an existing warehouse to a 9,400 sq ft extension to our
existing Crayford site. The extension opened in December 2022.
Spain
In March 2021 and April 2021, the Group exchanged contracts on
two freehold buildings in Southern Madrid and Northern Madrid,
respectively. Both existing buildings have been converted into
32,000 and 53,000 sq ft MLA self storage facilities and were opened
in November 2022.
In April 2021, the Group exchanged contracts on a freehold
building in Northern Barcelona. The existing building has been
converted into a 42,000 sq ft MLA store which opened in April
2023.
Development Sites
Opening 2023 FH/LH Status* MLA Other
-------------------------- ------ -------- ------- ----------------------
Redevelopments and Extensions
-----------------------------------------------------------------------------
London- Paddington LH CE, PG 8,400 Extension
Marble Arch
Paris- Pyrenees LH C, UC 22,200 Extension
New Developments
-----------------------------------------------------------------------------
Ellesmere Port FH C, UC 55,000 New build
Paris- South Paris FH C, UC 55,000 New build
Paris- West 1 FH CE, PG 56,000 New build
Paris- West 3 FH C, UC 58,000 New build
Paris- East 1 FH CE, PG 60,000 Conversion
Paris- North West 1 FH C, STP 54,000 Conversion
Eastern Madrid FH C, UC 50,000 Conversion
South Barcelona FH C, PG 30,600 Conversion
Central Barcelona 3 LH C, UC 14,700 Conversion
Amersfoort- Netherlands FH C, UC 58,000 New build
Almere- Netherlands FH C, UC 44,500 Conversion
Opening 2024
-------------------------- ------ -------- ------- ----------------------
New Developments
-----------------------------------------------------------------------------
London- Paddington FH C, UC 13,000 Conversion, Satellite
Park West
London- Lea Bridge FH C, UC 76,500 New build
South West Madrid FH C, STP 46,800 Conversion
Southern Madrid 2 FH C, STP 68,800 Conversion
Central Barcelona 2 LH CE, STP 24,700 Conversion
North East Madrid FH CE, STP 66,000 Conversion
Amsterdam- Netherlands FH CE, STP 61,400 New build
Aalsmeer- Netherlands FH C, UC 48,400 New build
Rotterdam- Netherlands FH C, UC 71,000 New build
Opening 2025
-----------------------------------------------------------------------------
New Developments
-----------------------------------------------------------------------------
London- Woodford FH C, PG 76,000 New build
London- Walton FH C, PG 20,700 Conversion
London- Wembley FH C, STP 49,000 New build
Paris- La Défense FH C, UC 44,000 Mixed use facility
Opening Beyond 2025
-----------------------------------------------------------------------------
New Developments
-----------------------------------------------------------------------------
London- Old Kent Road FH C, STP 76,500 New build
London- Bermondsey FH C, STP 50,000 New build
London- Romford FH C, STP 41,000 New build
Shoreham FH CE, STP 54,000 New build
Total Pipeline MLA (let sq ft- million) c. 1.455
-------------------------------------------- -------------------------------
Total Outstanding CAPEX (GBP'm) c. 134.0
-------------------------------------------- -------------------------------
*C = completed, CE = contracts exchanged, STP = subject to
planning, PG = planning granted, UC = under construction
UK
In Ellesmere Port in Northwest England we have secured a new
freehold development site, located in an accessible position near
junction 8 of the M53 on the affluent Wirral Peninsular. A 55,000
sq ft MLA new build store should open in late 2023.
In June 2018, Safestore opened its Paddington Marble Arch store.
A separate satellite store at Paddington Park West Place, with MLA
of 13,000 sq ft, will open during 2024. In addition, Safestore has
secured the lease of an existing space adjacent to our Paddington
Marble Arch store and will convert an existing warehouse into a
8,400 extension due to open in late 2023.
In April 2021, the Group exchanged contracts on a freehold
1.3-acre site at Lea Bridge in Northeast London. The acquisition of
the site has now been completed and we plan to open a 76,500 sq ft
MLA store in 2024 as the leases for existing tenants on the site
have up to two years to run. Rental income of approximately GBP170k
per annum is currently received on this site.
In addition, in April 2021, the Group exchanged contracts on a
freehold site in Woodford in Northeast London. Subject to planning,
we will open a 76,000 sq ft MLA store in 2025.
In Walton-on-Thames in London, we have secured a freehold site
with an existing warehouse which will be converted, subject to
planning permission, to a 20,700 sq ft store. We hope to open the
store in 2025.
The Group has completed the acquisition of a 0.5-acre site in
Wembley in North West London. The existing building will be
demolished and, subject to planning, a new purpose-built store will
be developed with an MLA of 49,000 sq ft. It is anticipated that
the store will open in 2025.
In November 2021, the Group completed the acquisition of a
1.2-acre freehold site off Old Kent Road in the London Borough of
Southwark in Southeast London. Subject to planning, we hope to open
a c. 76,500 sq ft MLA store in due course. Existing tenants on the
site will provide a rental income in the meantime.
The Group has also previously acquired a site in Bermondsey in
London. Bermondsey is a 0.5-acre freehold site with income from
existing tenants and is adjacent to our existing leasehold store.
Our medium-term aim, subject to planning permission, is to extend
our existing Bermondsey operations with the addition of a new self
storage facility to complement our existing store.
In Romford in London, we have secured a freehold site with an
existing warehouse which will be converted, subject to planning
permission, to a 41,000 sq ft store, opening in 2025.
In July 2021, the Group exchanged contracts on a freehold
0.8-acre site in Shoreham, West Sussex. Shoreham is situated
between Brighton and Worthing on the south coast of England.
Subject to planning, we will open a purpose built 54,000 sq ft MLA
store beyond 2025.
Our total UK development pipeline now amounts to c. 520,450 sq
ft of which c. 411,100 sq ft is in London.
Paris
Safestore has for many years owned a vacant freehold site in the
town of Nanterre on the edge of La Défense, Paris' main business
district. This area of Paris is undergoing significant development
and Safestore has invested a 24.9% stake in a joint venture
development company, PBC Les Groues SAS, which is constructing a c.
300,000 sq ft development of offices, retail, a school and
residential properties.
Safestore has contributed its Nanterre site into the project,
receiving cash of EUR1.0 million in addition to the delivery of an
underground storage area and reception within the complex, ready to
be fitted out into a 44,000 sq ft self storage facility. Planning
for the project has been received and construction has
commenced.
It is anticipated that the project will be completed in 2025
when the self storage facility will open.
In August 2021, the Group exchanged contracts on a freehold site
in Southern Paris with a significant frontage onto the N104
motorway. The site includes an existing building which will be
demolished and replaced by a 55,000 sq ft MLA store. We expect the
store to open in 2023.
Over the first half of 2022 we exchanged contracts on two
freehold development sites to the west of Paris. The sites require
planning permission and newly built stores of 56,000 sq ft and
58,000 sq ft are planned to be constructed by the end of 2023.
Paris East 1 and Paris North West 1 are freehold sites on which
we will convert existing buildings, subject to planning, to 60,000
sq ft and 54,000 sq ft stores respectively. We expect the stores to
open in 2023.
Our Paris pipeline now amounts to c. 349,200 sq ft.
Spain
In December 2019, the Group completed the acquisition of OMB
Self Storage which operated three leasehold properties and one
freehold property, all very well located in the centre of
Barcelona. Subsequently a further four stores have been opened, two
in Barcelona and two in Madrid and the business currently has an
MLA of 248,000 sq ft.
The Group is continuing its expansion of the business in
Barcelona and Madrid with the acquisition of the following
sites.
In June 2021, the Group exchanged contracts on a freehold
property in South Barcelona. The site includes an existing
industrial building which will be converted into a 30,600 sq ft MLA
self storage facility. Planning has been granted and we expect to
open the site in the 2022/23 financial year.
In August 2021, the Group exchanged contracts on a leasehold
site in Central Barcelona (Central Barcelona 2). The site is a
former car dealership which will be converted to a 24,700 sq ft MLA
store which, subject to planning, should open in 2024.
In December 2021, the Group exchanged contracts on a freehold
building in a commercial and industrial area of Eastern Madrid.
Subject to completion, we will convert the existing building into a
50,000 sq ft MLA self storage facility. It is anticipated that the
site will open in 2023.
In August 2022, the Group exchanged contracts on a freehold
building in a commercial and industrial area of South West Madrid.
Subject to planning and completion, we will convert the existing
building into a 46,800 sq ft MLA self storage facility. It is
anticipated that the site will open in 2024.
A new freehold site has been secured in Southern Madrid
(Southern Madrid 2) on which we will convert an existing building,
subject to planning permission, into a 68,800 sq ft storage
facility. It is anticipated that the site will open in 2024.
A new leasehold site in Central Barcelona (Central Barcelona 3)
has been acquired. The existing building will be converted into a
14,700 sq ft MLA store and is expected to open in 2023. The
building has planning permission and the lease is 30 years in
length.
During the period the Group acquired a building in North East
Madrid close to Madrid Barajas airport. Subject to planning, the
building will be converted into a 66,000 sq ft MLA store which we
anticipate will open in 2024.
The Spanish business now has eight open stores and a pipeline
consisting of a further seven stores with c. 301,600 sq ft of MLA
including 231,600 sq ft across four stores in Madrid and 70,000 sq
ft over three stores in Barcelona.
Netherlands
During the year we exchanged contracts on a freehold site at
Amersfoort, 40 minutes east of Amsterdam. The acquisition is
subject to planning permission and we anticipate that the new
store, which will have an MLA of 58,000 sq ft, will be opened in
2023.
The Group completed the acquisition of a freehold site in
Almere, a city with a population of 214,000 which is a 20 minute
drive from Amsterdam. Subject to planning, we will convert the two
existing buildings on the site into a 44,500 sq ft MLA self storage
facility. It is anticipated that the site will open in 2023.
New freehold sites have been secured in Amsterdam and Aalsmeer
where we will build new stores, subject to planning, of 61,400 sq
ft and 48,400 sq ft respectively. The two stores should open in
2024.
The Group has secured a freehold site in Rotterdam for
construction of a 71,000 sq ft MLA store subject to planning.
Rotterdam is one of the major cities in the Netherlands with a
population of 588,000 and forms part of the larger Randstad area.
The new site forms part of a larger re-development within the heart
of an affluent district of the city.
In the Netherlands, our pipeline now consists of 283,300 sq ft
of space in five stores.
Store Extensions
The Group plans to redevelop and extend its Pyrénées store in
Paris. The extension will add 22,200 sq ft and is planned to open
in 2023. As of September 2022, the store occupancy was 94%.
Lease Extensions
During the period we completed the extensions of our leases at
Edinburgh Fort Kinnaird, London- Charlton and Burnley stores.
The Edinburgh lease has been extended by a further 10 years to
2040 whilst Charlton's and Burnley's lease terms have both been
extended by 10 years to 2038.
At London- Charlton we have extended the lease term to 2038. In
doing so we have agreed a three month rent free period.
In Burnley we have also extended the lease to 2038 with tenant
break options every five years.
As part of our ongoing asset management programme, we have now
extended the leases on 30 stores or 83% of our leased store
portfolio in the UK since 2012. As a result, since 2012 the
remaining lease length of our UK stores has remained at c. 11-13
years.
Freehold Purchases
In Barcelona, the Group has been leasing its Valencia store
since 2013. During the period, the freehold of the site was
acquired for EUR3.6m.
In addition, the freehold of our Oldbury store in West
Birmingham was acquired for GBP5.65m.
Acquisition of Apeldoorn Self Storage Facility in the
Netherlands
During the period, the Group completed the acquisition of an
existing 58,000 sq ft self storage facility in Apeldoorn in the
Netherlands. The store was operating under the Stoor brand and is
situated in an easily accessible commercial district on the north
side of the city, which has a population of 165,000.
New Joint Venture with Carlyle and Investment in myStorage in
Germany
In December 2022 Safestore entered the German self storage
market via a new Joint Venture with Carlyle, which has acquired the
myStorage business.
Safestore has developed a multi-country highly scalable platform
with leading marketing and operational expertise in self storage,
with a proven track record for developing its platform in new
markets.
The acquisition of myStorage represents an excellent opportunity
to develop our platform into the attractive German self storage
market. The Joint Venture builds upon our previous successful
relationship with Carlyle having entered the Benelux market in
2019. Our common intention is to target development and acquisition
opportunities through the Joint Venture, providing the opportunity
to achieve operational scale and to develop local market knowledge,
whilst also retaining the option for Safestore to develop its own
wholly owned self storage sites in Germany. We look forward to
continuing our working relationship with Carlyle, and to developing
a long and mutually beneficial relationship.
The German market is one of Europe's more under-penetrated
markets with just 0.09 sq ft of storage space per capita which
compares to 0.76 sq ft in the UK, 0.24 sq ft in France, 0.24 sq ft
in Spain, 0.60 sq ft in the Netherlands and 0.20 sq ft in Belgium.
According to the 2022 FEDESSA report, there are just 320 facilities
in Germany and 7.6m sq ft of lettable space.
myStorage has seven medium to long-term leasehold stores and
326,000 sq ft of MLA in Berlin, Heidelburg, Mannheim, Fürth,
Nuremburg, Neu-Ulm and Reutlingen.
The occupancy of the portfolio is 73% with two of the stores
having opened in 2021.
Safestore's initial investment in the Joint Venture was a c.
EUR2.2 million equity investment for a 10% share of the Joint
Venture. Safestore will also earn a fee for providing management
services to the Joint Venture. The Group expects to earn an initial
return on investment of c.15% for the first full year before
transaction related costs reflecting its share of expected Joint
Venture profits and fees for management services
.
Portfolio Summary
The self storage market has been growing consistently for over
20 years across many European countries but few regions offer the
unique characteristics 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 central London and up to 32,000 per square mile in the
densest boroughs.
The population of the Paris urban area is 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 69% of our French stores are located and which
has one of the highest population densities in the western world.
85% of the Paris region population live in central parts of the
city versus the rest of the urban area, which compares with 60% in
the London region. There are currently c. 245 storage centres
within the M25 as compared to only c. 95 in the Paris urban
area.
In addition, barriers to entry in these two important city
markets are high, due to land values and limited availability of
sites as well as planning regulation. This is the case for Paris
and its first belt in particular, which inhibits new development
possibilities.
Our combined operations in London and Paris, with 79 stores,
contributed GBP58.9m of revenue and in the first half of the
financial year and offer a unique exposure to the two most
attractive European self storage markets.
Our Spanish portfolio currently consists of six stores in
Barcelona and two in Madrid. We have a further seven stores in our
development pipeline situated in both Madrid and Barcelona. We
consider both of these cities to have attractive characteristics in
relation to self storage and intend to continue to seek further
expansion opportunities.
Owned Store Portfolio London Rest
by Region & of UK Paris Spain Benelux Group
South
East UK Total Total
Number of Stores 73 59 132 29 8 16 185
Let Square Feet (m
sq ft) 2.284 2.126 4.410 1.091 0.105 0.518 6.124
Maximum Lettable
Area (m sq ft) 2.970 2.750 5.720 1.360 0.250 0.660 7.990
Average Let Square
Feet per store (k
sq ft) 31 36 33 38 13 32 33
Average Store Capacity
(k sq ft) 41 47 43 47 31 41 43
Closing Occupancy
% 76.9% 77.2% 77.1% 80.1% 42.4% 78.8% 76.7%
Average Rate (GBP
per sq ft) 37.36 23.12 30.50 36.90 31.12 17.32 30.58
Revenue (GBP'm) 51.5 30.2 81.7 21.8 1.7 4.9 110.1
Average Revenue per
Store (GBP'm) 0.71 0.51 0.62 0.75 0.21 0.31 0.60
The reported totals have not been adjusted for the impact of rounding
We have a strong position in both the UK and Paris markets
operating 132 stores in the UK, 73 of which are in London and the
South East, and 29 stores in Paris.
In the UK, 63% 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 rental
rates achieved are materially higher, enabling these stores to
typically achieve similar or better margins than the larger stores.
In London we operate 50 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 nine stores branded as Une Pièce
en Plus ("UPP") ("A spare room"). Over 60% of the UPP stores are
located in a cluster within a five-mile radius of the city centre,
which facilitates 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.
As at 30 April 2023, 71% of our Group Revenue, 65% of our stores
and 63% of our available capacity are in London, South East
England, Paris, Amsterdam and the Randstad area, Brussels,
Barcelona and Madrid. These major population areas deliver 71% of
the Group's store EBITDA from 62% of our MLA, highlighting the
attractiveness of being present in these major cities and
conurbations. The current pipeline includes 28 further developments
in these areas which will increase the number of stores to 69% of
our portfolio.
In addition, 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, Newcastle, Glasgow and Edinburgh.
Our 2019 acquisition of OMB in Barcelona and our 2022 Benelux JV
acquisition represents a platform into the Spanish, Netherlands and
Belgium markets where we hope to take advantage of further
development and acquisition opportunities.
Market
The self storage market in the UK, France, Spain, the
Netherlands and Belgium remains relatively immature compared to
geographies such as the USA and Australia. The SSA Annual Survey
(May 2023) confirmed that self storage capacity stands at 0.82 sq
ft per head of population in the UK. The most recent report
relating to Europe (FEDESSA's 2022 report) showed that capacity in
France is 0.24 sq ft per capita. Whilst the Paris market density is
greater than France, we estimate it to be significantly lower than
the UK at around 0.4 sq ft per inhabitant. This compares with
closer to 10 sq ft per inhabitant in the USA and 2 sq ft in
Australia. In the UK, in order to reach the US density of supply,
it would require the addition of around another 17,000 stores as
compared to c. 1,500 currently. In the Paris region, it would
require around 2,400 new facilities versus c. 95 currently
opened.
In Spain, the Netherlands and Belgium, geographies the Group has
recently entered, penetration is similarly low. In Spain capacity
is around 0.24 sq ft per head of population and the consumer is
serviced by just 580 stores. In the Netherlands penetration is 0.6
sq ft per head of population (355 stores) and in Belgium 0.2 sq ft
per head of population (101 stores).
The Group recently entered a JV with Carlyle in Germany. The
German market is one of Europe's more under-penetrated markets with
just 0.09 sq ft of storage space per capita and, according to the
2022 FEDESSA report, there are just 320 facilities in the country
and 7.6m sq ft of lettable space.
Our interpretation of the most recent 2023 SSA report is that
operators remain optimistic about expansion and the future growth
of the industry. The level of development estimated for the next
three years is similar to that witnessed in recent years and we do
not consider this level of new supply growth to be of concern. We
estimate new supply to represent around 2% to 3% of the traditional
self storage industry in the UK. These figures represent gross
openings and do not consider storage facilities closing or being
converted for alternative uses. We estimate that a small proportion
of these sites compete with existing Safestore stores.
New supply in London and Paris is likely to continue to be
limited in the short and medium term as a result of planning
restrictions, competition from a variety of other uses and the
availability of suitable land.
The supply in the UK market, according to the SSA Survey,
remains relatively fragmented despite a number of acquisitions in
the sector in recent years. The SSA's estimates of the scale of the
UK industry are finessed each year and changes from one year to the
next represent improved data rather than new supply. In the 2023
report the SSA estimates that 2,231 self storage facilities exist
in the UK market including around 739 container-based operations.
At the point in time that the 2023 survey was written, Safestore is
the industry leader by number of stores with 129 wholly owned sites
followed by Big Yellow with 108 stores (including Armadillo),
Access with 60 stores, Shurgard with 41 stores, Lok'n Store with 40
stores, Storage King with 38 stores and Ready Steady Store with 27
stores. In aggregate, the top seven leading operators account for
around 20% of the UK store portfolio. The remaining c. 1,780 self
storage outlets (including 739 container-based operations) are
independently owned in small chains or single units. In total there
are 1,086 storage brands operating in the UK.
Safestore's French business, UPP, is mainly present in the core
wealthier and more densely populated inner Paris and first belt
areas, whereas our two main competitors, Shurgard and Homebox, have
a greater presence in the outskirts and second belt of Paris.
Our Spanish business currently operates in Barcelona and Madrid.
The metropolitan areas of Barcelona and Madrid have combined
growing high-density populations of twelve million inhabitants and
significant barriers to entry.
Consumer awareness of self storage appears to be increasing but
at a relatively slow rate, providing an opportunity for future
industry growth. The SSA survey indicates that approximately half
of consumers have low awareness about the service offered by self
storage operators or had not heard of self storage at all. Since
2014, this statistic has only fallen 6ppts from 62%. Therefore, the
opportunity to grow awareness, combined with limited new industry
supply, makes for an attractive industry backdrop.
Self storage is a brand-blind product. 66% of respondents were
unable to name a self storage business in their local area (64% in
2022). The lack of relevance of brand in the process of purchasing
a self storage product emphasises the need for operators to have a
strong online presence. This requirement for a strong online
presence was also reiterated by the SSA Survey where 76% of those
surveyed (73% in 2022) confirmed that an internet search would be
their chosen means of finding a self storage unit to contact,
whilst knowledge of a physical location of a store as reason for
enquiry was only c. 30% of respondents (c. 26% in 2022).
There are numerous drivers of self storage growth. Most private
and 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.
Safestore's domestic customers' need for storage is often driven
by life events such as births, marriages, bereavements, divorces or
by the housing market including house moves and developments and
moves between rental properties. Safestore has estimated that UK
owner-occupied housing transactions drive around 8-13% of the
Group's new lets.
The Group's 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 Paris Spain Benelux
Personal Customers
Numbers (% of total) 77% 81% 89% 84%
Square feet occupied
(% of total) 58% 64% 82% 75%
Average Length of Stay
(months) 17.2 28.3 21.5 29.1
Business Customers
Numbers (% of total) 23% 19% 11% 16%
Square feet occupied
(% of total) 42% 36% 18% 25%
Average Length of Stay
(months) 25.8 29.4 28.5 29.8
Safestore's customer base is resilient and diverse and consists
of around 90,000 domestic, business and National Accounts customers
across London, Paris, Spain, the UK regions, the Netherlands and
Belgium.
Business Model
The Group operates in a market with relatively low consumer
awareness. It is anticipated that this will increase over time as
the industry matures. To date, despite the financial crisis in
2007/08, the implementation of VAT in the UK on self storage in
2012, Brexit and the Covid-19 pandemic, the industry has been
exceptionally resilient. In the context of uncertain economic
conditions, driven by inflation and the war in Ukraine, the
industry remains well positioned with limited new supply coming
into the self storage market.
With more stores inside London's M25 than any other operator and
a strong position in central Paris, Safestore has leading positions
in the two most important and demographically favourable markets in
Europe. In addition, our regional presence in the UK is unsurpassed
and contributes to the success of our industry-leading National
Accounts business. In the UK, Safestore is the leading operator by
number of wholly owned stores. With 62% of customers travelling for
less than 15 minutes to their storage facility (2023 SSA Survey)
Safestore's national store footprint represents a competitive
advantage.
The Group's capital-efficient portfolio of 185 wholly owned
stores in the UK, Paris, Spain, the Netherlands and Belgium
consists of a mix of freehold and leasehold stores. In order to
grow the business and secure the best locations for our facilities
we have maintained a flexible approach to leasehold and freehold
developments as well as being comfortable with a range of building
types, from new builds to conversions of warehouses and underground
car parks.
Currently, around a quarter of our stores in the UK are
leaseholds with an average remaining lease length at 30 April 2023
of 13.4 years (FY2022: 12.7 years). Although our property valuation
for leaseholds is conservatively based on future cash flows until
the next contractual lease renewal date, Safestore has a
demonstrable track record of successfully re-gearing leases several
years before renewal whilst at the same time achieving concessions
from landlords.
In England, we benefit from the Landlord and Tenant Act that
protects our rights for renewal except in case of redevelopment.
The vast majority of our leasehold stores have building
characteristics or locations in retail parks that make current
usage either the optimal and best use of the property or the only
one authorised by planning. We observe that our landlords, who are
property investors, value the quality of Safestore as a tenant and
typically prefer to extend the length of the leases that they have
in their portfolio, enabling Safestore to maintain favourable
terms.
In Paris, where 41% of stores are leaseholds, our leases
typically benefit from the well-enshrined Commercial Lease statute
that provides that tenants own the commercial property of the
premises and that they are entitled to renew their lease at a rent
that is indexed to the Indice des Loyers Commerciaux (Commercial
Rental Index) published by the state. Taking into account this
context, the valuer values the French leaseholds based on an
indefinite property tenure, similar to freeholds but at a
significantly higher exit cap rate.
The Group believes there is an opportunity to leverage its
highly scalable marketing and operational expertise in new
geographies outside the UK and Paris. During 2019, a Joint
Venture(14) was established with Carlyle, which acquired the M3
Self Storage business in the Netherlands which had six stores in
Amsterdam and Haarlem. In June 2020, the Joint Venture(14) added
the Lokabox business, a portfolio of six stores in Brussels (2),
Liege (2), Charleroi and Nivelles. In December 2020, the Joint
Venture(14) acquired the Opslag XL portfolio adding a further three
stores in Amsterdam, The Hague and Hilversum and opened a store in
Nijmegen in the Netherlands in January 2022. The Amsterdam store
has subsequently been closed as planned following lease expiry.
After three years of learning about and understanding these
markets, the Group acquired the remaining 80% of equity in the
Joint Venture(14) owned by Carlyle in March 2022.
In 2019, the Group entered the Spanish market with the
acquisition of OhMyBox. Our Spanish portfolio currently consists of
six stores in Barcelona, and two recently opened Madrid stores. We
have a further seven stores in our development pipeline situated in
both Madrid and Barcelona. We consider both of these cities to have
attractive characteristics in relation to self storage and intend
to continue to seek further expansion opportunities.
In late 2022, Safestore entered the German self storage market
via a new Joint Venture(15) with Carlyle, which has acquired the
myStorage business. myStorage has seven medium to long-term
leasehold stores and 326,000 sq ft of MLA in Berlin, Heidelburg,
Mannheim, Fürth, Nuremburg, Neu-Ulm and Reutlingen.
Our experience is that being flexible in its approach has
enabled Safestore to operate from properties and in markets that
would have been otherwise unavailable and to generate strong
cash-on-cash returns.
Safestore excels in the generation of customer enquiries which
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 key drivers of enquiries.
However, the internet is now by far the dominant channel,
accounting for 89% (H12022: 90%) of our enquiries in the UK and 84%
(H12022: 85%) in France. This dynamic is a clear benefit to the
leading national operators that possess the budget and the
management skills necessary to generate a commanding presence in
the major search engines. Safestore has developed and continues to
invest in a leading digital marketing platform that has generated
46% enquiry growth over the last five years.
Although mostly generated online, our enquiries are
predominantly handled directly by the stores and, in the UK, we
have a Customer Support Centre ("CSC") which handles customer
service issues in addition to enquiries, in particular when the
store colleagues are busy handling calls or outside of normal store
opening hours.
Our pricing platform provides the store and CSC colleagues with
system-generated real-time prices managed by our centrally based
yield-management team. Local colleagues have certain levels of
discretion to flex the system-generated prices but this is
continually monitored.
Customer service standards are high and customer satisfaction
feedback is consistently very positive. Safestore invites customers
to leave a review on a number of review platforms, including Feefo,
Google and Trustpilot. Our ratings for each of these three
providers in the UK are between 4.6 and 4.8 out of 5. In France,
Une Pièce en Plus uses Trustpilot to obtain independent customer
reviews and In H12023, achieved a "TrustScore" of 4.6 out of 5. In
Spain, OMB collects customer feedback via Google reviews and has
maintained a score of 4.6 out of 5. The key drivers of sales
success are the capacity to generate enquiries in a digital world,
the capacity to provide storage locations that are conveniently
located close to the customers' requirements and the ability to
maintain a consistently high quality, motivated retail team that is
able to secure customer sales at an appropriate storage rate, all
of which can be better provided by larger, more efficient
organisations.
We remain focused on business as well as domestic customers. Our
national network means that we are uniquely placed to further grow
the business customer market and in particular National Accounts.
Business customers in the UK now constitute 42% of our total space
let and have an average length of stay of 26 months. Within our
business customer category, our National Accounts business
represents around 632,000 sq ft of occupied space (around 13% of
the UK's occupancy). Approximately two-thirds of the space occupied
by National Accounts customers is outside London, demonstrating the
importance and quality of our well invested national estate.
The business now has in excess of c. 90,000 business and
domestic customers with an average length of stay of 27 months and
21 months respectively.
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.
With the recent establishment of a new GBP400 million unsecured
multi-currency Revolving Credit Facility, Safestore has secure
financing, a strong balance sheet and significant covenant
headroom. This provides the Group with financial flexibility and
the ability to grow organically and via carefully selected new
development or acquisition opportunities.
At 30 April 2023, we had 1.3m sq ft of unoccupied space in the
UK, 0.3m sq ft in France and 0.3m sq ft in Spain and Benelux,
equivalent to c. 47 full new stores. Our main focus is on filling
the spare capacity in our stores at optimally yield-managed rates.
The operational leverage of our business model will ensure that the
bulk of the incremental revenue converts to profit given the
relatively fixed nature of our cost base.
Trading Performance
UK Trading Performance
UK Operating Performance 2023 2022 Change
-------------------------------- ------ ------ ---------
Revenue (GBP'm) 81.7 78.9 3.5%
EBITDA (GBP'm)(3) 51.9 50.1 3.6%
EBITDA (after leasehold costs)
(GBP'm) 47.8 46.3 3.2%
Closing Occupancy (let sq ft-
million)(4) 4.410 4.549 -3.1%
Closing Occupancy (% of MLA) 77.1% 81.3% -4.2ppts
Maximum Lettable Area (MLA)(5) 5.720 5.600 2.1%
Average Storage Rate (GBP)(6) 30.50 28.53 6.9%
REVPAF (GBP) 29.19 28.60 2.1%
UK Operating Performance- like-for-like(9) 2023 2022 Change
-------------------------------------------- ------ ------ ---------
Storage Revenue (GBP'm) 65.9 64.1 2.8%
Ancillary Revenue (GBP'm) 14.2 13.9 2.2%
Revenue (GBP'm) 80.1 78.0 2.7%
EBITDA (GBP'm)(3) 50.8 49.3 3.0%
Closing Occupancy (let sq ft-
million)(4) 4.351 4.515 -3.6%
Closing Occupancy (% of MLA) 78.6% 82.0% -3.4ppts
Average Occupancy (let sq ft-
million)(4) 4.348 4.528 -4.0%
Average Storage Rate (GBP)(6) 30.55 28.57 6.9%
REVPAF (GBP) 29.16 28.58 2.0%
UK Statutory metrics 2023 2022 Change
-------------------------- ----- ------ -------
Operating profit (GBP'm) 74.5 232.6 -68.0%
The UK business had a solid first half of the year with revenue
up 3.5% for the six months. Like-for-like storage revenue was up
2.8% with ancillary revenues up 2.2% compared to April 2022. As a
result, total like-for-like revenue was up 2.7% for the period.
The UK result was driven by a continuing excellent like-for-like
average rate performance which was up 6.9% compared to the first
half of 2022. The like-for-like average rate also grew sequentially
in the second quarter of the period by 0.4% compared to the first
quarter. Like-for-like average occupancy was down by 4.0% compared
to H12022 and the like-for-like closing occupancy at the end of
April 2023 was down 3.4ppts at 78.6% (H12022: 82.0%).
Total revenue growth of 3.5% reflected the like-for-like
performance, the 2023 openings of Wigan and London-Morden, the 2022
acquisition of Christchurch, and the 2022 opening of London-Bow.
All acquisitions and new store developments are performing in line
with or ahead of their business cases.
Our continued focus on cost was evident in the half year. During
the period, our cost base increased by 3.5% in total or 2.1% on a
like-for-like basis.
As a result, underlying EBITDA after leasehold costs for the UK
business was GBP47.8m (2022: GBP46.3m), an increase of GBP1.5m or
3.2%.
Operating profit for the UK business was GBP74.5m (H1 2022:
GBP232.6m), a decrease of GBP158.1m or 68%, driven by the decrease
in the gain of investment properties of GBP158.5m to GBP24.5m (H1
2022: GBP183.0m).
Paris Trading Performance
Paris Operating Performance
- Total and like-for-like(9) 2023 2022 Change
-------------------------------- ------ ------ ---------
Storage Revenue (EUR'm) 22.81 21.77 4.8%
Ancillary Revenue (EUR'm) 2.01 2.03 -1.0%
Revenue (EUR'm) 24.82 23.80 4.3%
EBITDA (EUR'm)(3) 16.9 16.3 3.7%
EBITDA (after leasehold costs)
(EUR'm) 13.7 13.3 3.3%
Closing Occupancy (let sq ft-
million)(4) 1.091 1.098 -0.6%
Closing Occupancy (% of MLA) 80.1% 80.6% -0.5ppts
Maximum Lettable Area (MLA)(5) 1.360 1.360 -%
Average Occupancy (let sq ft-
million)(4) 1.095 1.087 0.7%
Average Storage Rate (EUR)(6) 42.02 40.38 4.1%
REVPAF (EUR) 36.73 35.24 4.2%
Revenue (GBP'm) 21.8 20.0 9.0%
Paris Statutory metrics 2023 2022 Change
-------------------------- ----- ----- -------
Operating profit (GBP'm) 29.1 58.5 -50.3%
Operating profit (EUR'm) 33.1 69.5 -52.4%
Paris' performance in the period was encouraging with good
momentum in the second quarter. Storage revenue grew by 4.8%
compared to H1 2022 and by 6.6% in the second quarter. Ancillary
revenues were down 1.0% compared to April 2022, Overall, this
resulted in like-for-like revenue growing by 4.3%.
Further, the total and like-for-like cost base in Paris was up
5.3% compared to the prior year and, as a result, like-for-like
EBITDA grew to EUR16.9m (2022: EUR16.3m), an improvement of EUR0.6m
or 3.7% on 2022.
The average storage rate was up 4.1% for the period and grew
sequentially in the second quarter by 3.7% compared to the first
quarter. Average occupancy was up 0.7% and closing occupancy, at
80.1%, was down 0.5ppts compared to April 2022
Sterling equivalent revenue was up 9.0% reflecting a 4.3%
weakening in the average Sterling to Euro exchange rate over the
comparative period.
Operating profit for the Paris business was GBP29.1m (H1 2022:
GBP58.5m), a decrease of GBP29.4m or 50.3%, driven by the decrease
in the gain of investment properties of GBP26.1m to GBP14.4m (H1
2022: GBP40.5m).
Spain Trading Performance
Spain Operating Performance- total 2023 2022 Change
------------------------------------------- ------ ------ ----------
Storage Revenue (EUR'm) 1.72 1.57 9.6%
Ancillary Revenue (EUR'm) 0.24 0.16 50.0%
Revenue (EUR'm) 1.95 1.73 13.4%
EBITDA (EUR'm)(3) 0.5 1.1 -54.5%
EBITDA (after leasehold costs) (EUR'm) 0.3 0.8 -62.5%
Closing Occupancy (let sq ft- million)(4) 0.105 0.094 11.7%
Closing Occupancy (% of MLA) 42.4% 86.6% -44.2ppts
Maximum Lettable Area (MLA)(5) 0.250 0.110 127.3%
Average Storage Rate (EUR)(6) 35.44 34.09 4.0%
REVPAF (EUR) 19.81 32.13 -38.3%
Revenue (GBP'm) 1.7 1.4 21.4%
Spain Operating Performance- like-for-like(9) 2023 2022 Change
----------------------------------------------- ------ ------ ---------
Storage Revenue (EUR'm) 1.61 1.57 2.5%
Ancillary Revenue (EUR'm) 0.20 0.16 23.1%
Revenue (EUR'm) 1.80 1.73 4.7%
EBITDA (EUR'm)(3) 1.1 1.0 10.0%
EBITDA (after leasehold costs) (EUR'm) 0.9 0.7 28.6%
Closing Occupancy (let sq ft- million)(4) 0.085 0.094 -9.6%
Closing Occupancy (% of MLA) 78.3% 86.6% -8.3ppts
Average Occupancy (let sq ft- million)(4) 0.087 0.093 -6.5%
Maximum Lettable Area (MLA)(5) 0.110 0.110 -
Average Storage Rate (EUR)(6) 37.18 34.09 9.1%
REVPAF (EUR) 33.55 32.13 4.4%
Spain Statutory metrics 2023 2022 Change
-------------------------- ----- ----- -------
Operating profit (GBP'm) 2.8 1.2 133.3%
Operating profit (EUR'm) 3.1 1.4 121.4%
Our Spanish business, which was acquired in December 2019,
contributed EUR1.95m of revenue in the period, up 13.4% compared to
the prior year. The strategy of improving average rate and
ancillary sales whilst sacrificing some occupancy is working.
Closing occupancy on a like-for-like basis was down 8.3ppts at
78.3% (H12022: 86.6%) whilst like-for-like average storage rate for
the six months grew by 9.1% to EUR37.18 (H12022: EUR34.09) with
ancillary revenues improving strongly by 23.1%.
It should be noted that the like-for-like occupancy in Barcelona
has initially been diluted by the new Central Barcelona 2 store
having opened in close proximity and within the same catchment area
as an existing store. In addition, the imminent opening of Central
Barcelona 3 also within short distance may initially further dilute
the like-for-like occupancy, but management believes that, given
the limited supply in central Barcelona, once the absorption phase
has been passed, the business will generate higher revenue and
profits.
The business currently operates eight stores, four of them
having only recently opened. A further seven stores are due to open
in the next 18 months. Once their revenue stabilizes, we expect the
business to be able to provide similar levels of margins as the
rest of the more mature business.
The above revenue performance, combined with a modest investment
in central headcount resulted in the business contributing EUR0.5m
of EBITDA (H12022: EUR1.1m)
Operating profit for the Spain business was GBP2.8m (H1 2022:
GBP1.2m), an increase of GBP1.6m or 133.3%, driven by the increased
in gain of investment properties of GBP1.7m to GBP2.1m (H1 2022:
GBP0.4m).
Benelux Trading Performance (14)
Our Netherlands and Belgium businesses were acquired on 30 March
2022, contributed EUR5.5m revenue in the period and EBITDA of
EUR2.8m.
Our Netherlands business ended the period with a closing
occupancy of 80.3% whilst our Belgian business had a 75.9%
occupancy.
Frederic Vecchioli
13 June 2023
Financial Review
Underlying Income Statement
The table below sets out the Group's underlying results of
operations for the six months ended 30 April 2023 and the six
months ended 30 April 2022.
H1 2023 H1 2022 Mvmt
GBP'm GBP'm %
Revenue 110.1 101.0 9.0%
Underlying costs (40.4) (36.0) 12.2%
Share of associate's underlying
EBITDA - 0.2 (100.0%)
-------- --------
Underlying EBITDA 69.7 65.2 6.9%
Leasehold rent (7.2) (6.5) 10.8%
-------- --------
Underlying EBITDA after leasehold
rent 62.5 58.7 6.5%
Depreciation (0.6) (0.5) 20.0%
Finance charges (7.5) (5.9) 27.1%
Share of associate's finance
charges - (0.5) (100.0%)
-------- --------
Underlying profit before tax 54.4 51.8 5.0%
Current tax (2.6) (2.6) 0.0%
Adjusted EPRA earnings 51.8 49.2 5.3%
Share-based payments charge (1.3) (6.0) (78.3%)
EPRA basic earnings 50.5 43.2 16.9%
======== ========
Average shares in issue (m) 216.5 210.8
Diluted shares (for ADE EPS)
(m) 219.0 218.6
Adjusted diluted EPRA EPS (p) 23.7 22.5 5.3%
Notes:
1. Adjusted Diluted EPRA EPS is defined in note 2 to the financial statements.
2. Adjusted EPRA earnings excludes share-based payment charges
and, accordingly, the underlying EBITDA, underlying EBITDA after
leasehold rent and underlying profit before tax measures have been
restated to exclude share-based payment charges for
consistency.
The table below reconciles statutory profit before tax in the
income statement to underlying profit before tax in the table
above.
H1 2023 H1 2022
GBP'm GBP'm
Statutory profit before tax 103.4 285.2
Adjusted for
- gain on investment properties
and investment properties under
construction (51.7) (227.9)
- change in fair value of derivatives 1.4 (0.8)
- net exchange loss - 0.3
- share-based payments 1.3 6.0
- other exceptional gains - (10.5)
- exceptional finance income - (0.5)
Underlying profit before tax 54.4 51.8
======== ========
Management considers the above presentation of earnings to be
representative of the underlying performance of the business.
Underlying EBITDA increased by 6.9% to GBP69.7m (H1 2022:
GBP65.2m) reflecting a 9.0% increase in revenue offset by a 12.2%
increase in the underlying cost base (see below).
Finance charges increased from GBP5.9m in H1 2022 to GBP7.5m in
H1 2023. This principally reflects the increased borrowing
associated with store acquisitions and developments. It should be
noted, on 11 November 2022, the Group completed the refinancing of
its RCF which was due to expire in June 2023. The previous GBP250.0
million Sterling and EUR70.0 million Euro RCFs have been replaced
with a single multi-currency GBP400 million facility.
As a result, we achieved a 5.0% increase in underlying profit
before tax of GBP54.4m (H1 2022: GBP51.8m).
The reduction in statutory profit of GBP181.8m to GBP103.4m (H1
2022: GBP285.2) results from the lower gain on investment
properties of GBP176.2m to GBP51.7m (H1 2022: GBP227.9m) as well as
a reduction in exceptional items of GBP11.0m offset by the lower
share-based payment charge by GBP4.7 million to GBP1.3 million (H1
2022: GBP6.0 million)
In the prior year, included within statutory profit before tax
were other exceptional gains of GBP10.5m. GBP5.5m related to the
valuation gain of Safestore's 20% investment in the Joint Venture
formed in 2019 with Carlyle that arose on acquisition of the
remaining 80%, with GBP5.0m relating to the profit on the sale of
the Nanterre land in Paris in November 2021. Further, in the prior
year, the exceptional finance income related to the profit made on
the termination of interest rate swaps associated with the Joint
Venture.
Given the Group's REIT status in the UK, tax is normally only
payable in France, Spain, Netherlands and Belgium. The current tax
charge for the period was flat at GBP2.6m (H1 2022: GBP2.6m).
As explained in note 2 to the financial statements, management
considers that the most representative earnings per share ("EPS")
measure is Adjusted Diluted EPRA EPS which has increased by 5.3% to
23.7 pence (H1 2022: 22.5 pence).
Reconciliation of Underlying EBITDA
The table below reconciles the operating profit included in the
consolidated income statement to underlying EBITDA.
H1 2023 H1 2022
GBP'm GBP'm
Statutory operating profit 114.9 292.6
Adjusted for
- gain on investment properties (47.3) (223.9)
- share of associate's
finance charges - 0.5
- depreciation 0.6 0.5
- variable lease payments 0.2 -
- share-based payments 1.3 6.0
Other exceptional gains
- net gain on deemed disposal
of investment in associate - (5.5)
- profit on sale of land - (5.0)
Underlying EBITDA 69.7 65.2
======== ========
The main reconciling items between statutory operating profit
and underlying EBITDA are the gain on investment properties of
GBP47.3m in H1 2023 (H1 2022: GBP223.9m), represented by a gain on
investment properties and investment properties under construction
of GBP51.7m and fair value re-measurement of lease liabilities
add-back (GBP4.4m), as well as adjustments for other exceptional
gains, as mentioned above. The Group's approach to the valuation of
its investment property portfolio at 30 April 2023 is discussed
below.
Underlying Profit by geographical region
The Group is organised and managed in five operating segments
based on geographical region, with Benelux representing our
Netherlands and Belgium operations. The table below details the
underlying profitability of each region.
H1 2023 H1 2022
Total Total
UK Paris Spain Benelux (CER) UK Paris Spain Benelux (CER)
GBP'm EUR'm EUR'm EUR'm GBP'm GBP'm EUR'm EUR'm EUR'm GBP'm
Revenue 81.7 24.8 1.8 5.5 108.8 78.9 23.8 1.7 0.8 101.0
Underlying
cost of sales (25.2) (6.4) (0.8) (2.3) (33.5) (23.0) (5.9) (0.4) (0.3) (28.6)
------- ------ ------ -------- ------- ------- ------ ------ ---------- -------
Store EBITDA 56.5 18.4 1.0 3.2 75.3 55.9 17.9 1.3 0.5 72.4
Store EBITDA
margin 69.2% 74.2% 55.6% 58.2% 69.2% 70.8% 75.2% 76.5% 62.5% 71.7%
LFL store
EBITDA margin 68.9% 74.2% 77.8% - 70.0% 70.6% 75.2% 76.5% - 71.6%
Underlying
administrative
expenses (4.6) (1.5) (0.5) (0.4) (6.6) (5.8) (1.6) (0.2) (0.1) (7.4)
Underlying
EBITDA 51.9 16.9 0.5 2.8 68.7 50.1 16.3 1.1 0.4 65.0
EBITDA margin 63.5% 68.1% 27.8% 50.9% 63.1% 63.5% 68.5% 64.7% 50.0% 64.4%
LFL EBITDA
margin 63.4% 68.1% 61.1% - 64.3% 63.2% 68.5% 58.8% - 64.3%
Leasehold rent (4.1) (3.2) (0.2) (0.2) (7.0) (3.8) (3.0) (0.3) - (6.5)
Underlying
EBITDA after
leasehold rent 47.8 13.7 0.3 2.6 61.7 46.3 13.3 0.8 0.4 58.5
======= ====== ====== ======== ======= ======= ====== ====== ========== =======
EBITDA after
leasehold rent
margin 58.5% 55.2% 16.7% 47.3% 56.7% 58.7% 55.9% 47.1% 50.0% 57.9%
UK Paris Spain Benelux Total UK Paris Spain Benelux Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Underlying EBITDA
after leasehold
rent (CER) 47.8 11.6 0.3 2.0 61.7 46.3 11.3 0.6 0.3 58.5
Adjustment to
actual exchange
rate - 0.5 0.1 0.2 0.8 - - - - -
Reported underlying
EBITDA after
leasehold rent 47.8 12.1 0.4 2.2 62.5 46.3 11.3 0.6 0.3 58.5
======= ====== ====== ======== ======= ======= ====== ====== ========== =======
Note: CER is Constant Exchange Rates (Euro denominated results
for the current period have been retranslated at the exchange rate
effective for the comparative period in order to present the
reported results on a more comparable basis).
Underlying EBITDA in the UK increased by GBP1.8m, or 3.6%, to
GBP51.9m (H1 2022: GBP50.1m), reflecting a 3.5% increase in
revenue, arising from a 6.9% increase in average rate offset by a
decrease in like-for-like average occupancy of 4.0%, and an
increase of 3.5% in the underlying cost base, with like-for-like
underlying costs increasing 2.1%. The UK also reflected steady
like-for-like revenue growth of 2.7%. The underlying UK EBITDA
margin remained constant at 63.5% compared to H1 2022 whilst the
like-for-like EBITDA margin saw a marginal increase.
In Paris, underlying EBITDA increased by EUR0.6m, or 3.7%, to
EUR16.9m (H1 2022: EUR16.3m), reflecting a EUR1.0m increase in
revenue, arising from a 4.1% increase in the average storage rate
coupled with a 0.7% increase in average occupancy. The EBITDA after
leasehold costs margin in Paris decreased slightly from 55.9% in H1
2022 to 55.2% in H1 2023, reflecting the underlying cost base of
the portfolio, with underlying costs increasing by 5.3%. Underlying
EBITDA after leasehold rent in Paris increased by 3.0% to EUR13.7m
(H1 2022: EUR13.3m).
In Spain, revenue increased to EUR1.8m (H1 2002: EUR1.7m),
arising from a 9.1% increase in like-for-like average storage rate,
offset by a decrease in like-for-like average occupancy of 6.5%.
Underlying EBITDA decreased by EUR0.6m to EUR0.5m, due to an
increase in the underlying cost base and administrative expenses
resulting from additional employment costs to support the new
stores as well as their dilutive impact whilst they achieve
stabilisation.
On 30 March 2022, Safestore acquired the remaining 80% of the
equity owned by Carlyle Europe Realty in the Joint Venture formed
in 2019. The Joint Venture was set up in 2019 to acquire and
develop assets in The Netherlands and Belgium in order to leverage
Safestore's operating platform outside our core markets. The
contribution to revenue for the period was EUR5.5m and EUR2.6m
EBITDA after leasehold costs.
The combined performance of the UK, Paris, Spain, Netherlands
and Belgium resulted in a 5.5% increase in underlying EBITDA after
leasehold rent at constant exchange rates. Adjusting for a
favourable exchange rate movement of 4.3% resulting in an impact of
GBP0.8m in the current year, Group reported underlying EBITDA after
leasehold rent has increased by 6.8% or GBP4.0m to GBP62.5m (H1
2022: GBP58.5m, excluding GBP0.2m of associate EBITDA).
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).
The split of the Group's revenues by geographical segment is set
out below for H1 2022 and H1 2023.
% of % of
H1 2023 total H1 2022 total % change
UK GBP'm 81.7 73% 78.9 78% 3.5%
Paris
Local currency EUR'm 24.8 23.8 4.3%
Paris in Sterling GBP'm 21.8 20% 20.0 20% 9.0%
Spain
Local currency EUR'm 1.8 1.7 13.4%
Spain in Sterling GBP'm 1.7 2% 1.4 1% 21.4%
Benelux
Local currency EUR'm 5.5 0.8 588%
Benelux in Sterling GBP'm 4.9 5% 0.7 1% 600%
Average exchange
rate EUR:GBP 1.139 1.190 4.3%
Total revenue 110.1 100% 101.0 100% 9.0%
======== ======= ======== ======= =========
The Group's reported revenue increased by 9.0% or GBP9.1m during
the period. This was driven by the reported average rental rate for
the Group increasing to GBP30.58 (H1 2022 GBP29.38), offset by a
decrease in occupancy of 4.0ppts to 76.7% (H1 2022: 80.7%). The
Group's occupied space was 62,000 sq ft lower at 30 April 2023
(6.124 million sq ft) than at 30 April 2022 (6.186 million sq
ft).
On a like-for-like basis, adjusting for the impact of new
stores, the Group's revenue has increased by 4.1% compared to H1
2022. Adjusting for the exchange impact in the current year,
revenue increased by 3.1% on a constant currency and like-for-like
basis.
In the UK, reported revenue increased by GBP2.8m or 3.5%. This
was driven by the average rental rate increasing by 6.9% to
GBP30.50 (H1 2022: GBP28.53) offset by a closing occupancy decrease
of 3.1% to 4.410 million sq ft at 30 April 2023 (H1 2022: 4.549
million sq ft). The average space occupied during the period
decreased by 3.2% compared with H1 2022 at 4.40 million sq ft (H1
2022: 4.55 million sq ft).
On a like-for-like basis, adjusting for new stores, UK revenue
increased by GBP2.1m or 2.7% arising from a 6.9% increase in the
average store rate offset by a 4.0% decrease in average
occupancy.
In Paris, revenue increased by EUR1.0m or 4.3%. The average Euro
exchange rate for H1 2023 was EUR1.139:GBP1 compared with
EUR1.190:GBP1 in H1 2022 resulting in a positive impact on revenue
of GBP0.9m and revenue in constant currency increased by GBP0.9m to
GBP20.9m (H1 2022: GBP20.0m).
The average rental rate in Paris was EUR42.02 for the period, an
increase of 4.1% on H1 2022, EUR40.38.
Paris average occupancy for the period has increased by 0.7%
compared to 30 April 2022 to 1.095 million sq ft with closing
occupancy at 30 April 2023 decreasing slightly by 0.6% compared to
30 April 2022 to 1.091 million sq ft.
For Spain, revenue was EUR1.8m in the period. The average rental
rate in Spain was EUR35.44 for the period, an increase of 4.0% on
H1 2022 at EUR34.09. Closing occupancy was 0.105 million sq ft (H1
2022: 0.094 million sq ft), or 78.3% (H1 2022: 86.6%) on a
like-for-like basis.
The Benelux business contributed of EUR5.5m of revenue for the
period. For the Netherlands, closing occupancy was 80.3% with an
average rental rate of EUR18.95, and for Belgium, closing occupancy
was 75.9% with an average rental rate of EUR20.80.
Analysis of Cost Base
On a like-for-like basis, adjusting for new stores, total costs
increased by 3.1% from GBP35.5m in H1 2022 to GBP36.6m in H1 2023,
The below tables detail the key movements in cost of sales and
administration expenses between H1 2022 and H1 2023.
Cost of sales
Cost of sales H1 2023 H1 2022
GBP'm GBP'm
Reported cost
of sales (34.5) (29.1)
Adjusted for:
Depreciation 0.6 0.5
Variable lease payments 0.2 -
Underlying cost of
sales (33.7) (28.6)
======== ========
Underlying cost of sales
for H1 2022 (28.6)
New developments cost of
sales 0.4
Underlying cost of sales for H1
2022 (Like-for-like) (28.2)
Employee remuneration and
volume related (1.1)
Utilities, facilities and
business rates (1.2)
Enquiry generation (0.3)
Underlying cost of sales for H1
2023 (Like-for-like; CER) (30.8)
New developments cost of
sales (2.7)
Underlying cost of sales
for H1 2023 (CER) (33.5)
Foreign exchange (0.2)
Underlying cost of sales
for H1 2023 (33.7)
========
In order to arrive at underlying cost of sales, adjustments are
made to remove the impact of depreciation and variable lease
payments.
Adjusting for the impact of new stores, underlying cost of sales
at CER on a like-for-like basis increased by 9.2% or GBP2.6m, to
GBP33.7m (H1 2022: GBP28.6m), principally due to increased employee
remuneration and volume related costs and facilities and utilities
costs.
The cost of sales attributable to new and acquired sites at
Christchurch, Wigan, London-Morden, North Barcelona, Central
Barcelona, North Madrid, South Madrid and Belgium and The
Netherlands is GBP2.7m in H1 2023.
Administrative Expenses
The table below reconciles reported administrative expenses to
underlying administrative expenses and details the key movements in
underlying administrative expenses between H1 2022 and H1 2023.
Administrative expenses H1 2023 H1 2022
GBP'm GBP'm
Reported administrative
expenses (8.0) (13.4)
Adjusted for:
Share-based payments 1.3 6.0
Exceptional items - -
Underlying administrative
expenses (6.7) (7.4)
======== ========
Underlying administrative expenses
for H1 2022 (7.4)
New development administrative
expenses 0.1
Underlying administrative expenses for
H1 2022 (Like-for-like) (7.3)
Employee related costs 1.2
Professional fees and administration
costs 0.3
Underlying administrative expenses for
H1 2023 (Like-for-like; CER) (5.8)
New development administrative
expenses (0.8)
Underlying administrative expenses
for H1 2023 (CER) (6.6)
Foreign exchange (0.1)
Underlying administrative expenses
for H1 2023 (6.7)
========
In order to arrive at underlying administrative expenses,
adjustments are made to remove the impact of exceptional items,
share-based payments and corporate transaction costs.
Underlying administrative expenses decreased by 9.5% or GBP0.6m
to GBP6.7m (H1 2022: GBP7.3m). The decrease arose predominantly
from a reduction in employee and related costs of GBP1.2m, offset
by new stores and development administrative expenses of
GBP0.7m.
Exceptional items
In France, the basis on which property taxes have been assessed
has been challenged by the tax authority for financial years 2012
to 2013 and 2016 onwards. In March 2021 the French Court of Appeal
(COA) delivered a judgement in respect of years 2012 and 2013,
which resulted in a partial success for the Group. A further appeal
was lodged with the French Supreme Court (SC) against those
decisions on which the Group was unsuccessful, but this was
unsuccessful following decisions released by the SC in H1 2023. The
outcome for 2012 and 2013 is therefore final. A provision is
included in the consolidated financial accounts of GBP2.6m at 30
April 2023 (31 October 2022: GBP2.4m), to reflect the increased
uncertainty surrounding the likelihood of a successful outcome for
years 2016 onwards, which are subject to separate litigation. Of
the total provided, GBP0.2m has been charged in relation to 6
months to 30 April 2023 (30 April 2022: GBP0.1m) within cost of
sales (underlying EBITDA).
Investment Properties
A full external valuation of the store portfolio is undertaken
by the Group on an annual, rather than a six-monthly basis. At 30
April 2023, a sample of the Group's largest properties,
representing approximately 43% of the value of the Group's
investment property portfolio at 31 October 2022, has been valued
by the Group's external valuers, Cushman & Wakefield LLP
("C&W"). In addition, at the same date, the Directors have
prepared estimates of fair values for the remaining 57% of the
Group's investment property portfolio, updating 31 October 2022
valuations to incorporate latest assumptions to reflect current
market conditions and trading.
As a result of this exercise, the net gain or loss on investment
properties during the period was as follows.
H1 2023 H1 2022
GBP'm GBP'm
Revaluation of investment
properties 52.3 229.8
Revaluation of investment properties
under construction (0.6) (1.9)
Fair value re-measurement
of lease liabilities add
back (4.4) (4.0)
Gain on investment
properties 47.3 223.9
======== ========
The movement on investment properties reflects the increased
value of the Group's store portfolio as a result of the continuing
strong trading performance and store extensions. The UK business
contributed GBP24.4m of the GBP52.3m net revaluation gain, with a
GBP16.5m revaluation gain arising in Paris, a GBP2.3m revaluation
gain arising in Spain and a GBP9.1m valuation gain arising in
Benelux. The valuation gain has primarily arisen due to improving
average rate achieved in each of the geographies.
Operating profit
Reported operating profit decreased by GBP177.7m from GBP292.6m
in H1 2022 to GBP114.9m in H1 2023, primarily reflecting a
GBP176.6m lower investment property gain offset by a GBP4.5m
improvement in underlying EBITDA.
Net finance costs
Net finance costs include interest payable, interest on
obligations under lease labilities, fair value movements on
derivatives, exchange gains or losses, unwinding of discounts and
exceptional finance income. Net finance costs increased by GBP4.1m
to GBP11.5m in H1 2023 (H1 2022: GBP7.4m). The main driver of the
increase was net bank interest payable reflecting the Group's
additional borrowings to fund the Group's acquisition and
development activity and fair value movements on derivatives.
H1 2023 H1 2022
GBP'm GBP'm
Interest from loan
to associates - 0.1
Other interest received 0.5 0.1
-------- --------
Underlying finance
income 0.5 0.2
Exceptional finance
income - 0.5
-------- --------
Total finance income 0.5 0.7
Net bank interest payable (7.3) (5.8)
Amortisation of debt issuance costs
on bank loans (0.7) (0.3)
-------- --------
Underlying finance costs (8.0) (6.1)
Interest on obligations under
lease liabilities (2.6) (2.5)
Fair value movement on derivatives (1.4) 0.8
Net exchange losses - (0.3)
-------- --------
Total finance
costs (12.0) (8.1)
Net finance
costs (11.5) (7.4)
======== ========
Underlying finance charge
The underlying finance costs (net bank interest payable
reflecting term loan, swap and USPP interest costs and the
amortisation of debt issuance costs) increased by GBP1.9m to
GBP8.0m (H1 2022: GBP6.1m), principally reflecting the Group's
additional borrowings in the year drawn to fund the Group's
acquisition and development activity as wells as increased
amortisation of debt issuance costs arising from the refinancing in
November 2022. The underlying finance costs represent the finance
expense before interest on obligations under lease liabilities,
changes in fair value of derivatives and exceptional items and is
disclosed because management reviews and monitors performance of
the business on this basis.
Offsetting the underlying finance costs is the underlying
finance income of GBP0.5m (H1 2022: GBP0.2m). The increase in
underlying finance income is mostly due to GBP0.4m received on
settlement of interest rate swaps at the end of April 2023. As a
result, net underlying finance charges were GBP7.5m in the period
(H1 2022: GBP5.9m).
Based on the drawn debt position as at 30 April 2023, the
effective interest rate is analysed as follows:
Facility Drawn Hedged Hedged Bank Hedged Floating Total
GBP/EUR'm GBP'm GBP'm % Margin Rate Rate Rate
UK Revolver -
GBP drawn GBP400.0 GBP137.0 GBP55.0 40% 1.25% 0.69% 4.18% 4.03%
UK Revolver -
EUR drawn GBP35.9 - - 1.25% - 2.89% 4.14%
UK Revolver- non-utilisation GBP227.1 - - - 0.50% - - 0.50%
US Private Placement
2024 EUR50.9 GBP44.6 GBP44.6 100% 1.59% - - 1.59%
US Private Placement
2026 EUR70.0 GBP61.4 GBP61.4 100% 1.26% - - 1.26%
US Private Placement
2026 GBP35.0 GBP35.0 GBP35.0 100% 2.59% - - 2.59%
US Private Placement
2027 EUR74.1 GBP64.9 GBP64.9 100% 2.00% - - 2.00%
US Private Placement
2028 GBP20.0 GBP20.0 GBP20.0 100% 1.96% - - 1.96%
US Private Placement
2028 EUR29.0 GBP25.4 GBP25.4 100% 0.93% - - 0.93%
US Private Placement
2029 GBP50.5 GBP50.5 GBP50.5 100% 2.92% - - 2.92%
US Private Placement
2029 GBP30.0 GBP30.0 GBP30.0 100% 2.69% - - 2.69%
US Private Placement
2029 EUR105.0 GBP92.0 GBP92.0 100% 2.45% - - 2.45%
US Private Placement
2031 GBP80.0 GBP80.0 GBP80.0 100% 2.39% - - 2.39%
US Private Placement
2033 EUR29.0 GBP25.4 GBP25.4 100% 1.42% - - 1.42%
Unamortised finance
costs - (GBP4.9) - - - - - -
Total GBP929.3 GBP697.2 GBP584.2 84% 2.77%
========== ========= ========= ======= ======
On 11 November 2022, the Group completed the refinancing of its
RCF which were due to expire in June 2023. The previous GBP250.0
million Sterling and EUR70.0 million Euro RCFs have been replaced
with a single multi-currency GBP400 million facility. In addition,
a further GBP100 million uncommitted accordion facility is
incorporated in the facility agreement. The facility is for a
four-year term with two one-year extension options exercisable
after the first and second years of the agreement.
The margin is at the same level as the previous facility
agreements, with the Group paying interest at a margin of 1.25%
plus SONIA or Euribor depending on whether the borrowings are drawn
in Sterling or Euros.
As at 30 April 2023, GBP172.9m of the GBP400.0m UK revolver was
drawn as GBP137.0m and EUR41.0m (GBP35.9m). The drawn amounts
attract a bank margin of 1.25%, and the Group pays a
non-utilisation fee of 0.4375% on the undrawn balance of
GBP227.1m.
The Group has interest rate hedge agreements in place to June
2023, swapping SONIA on GBP55.0m at a weighted average effective
rate of 0.69%. These interest rate swaps are in place to hedge the
UK Revolver floating SONIA rate.
The 2024, 2026, 2027, 2028, 2029 and 2033 US Private Placement
Notes are denominated in Euros and attract fixed interest rates of
1.59% (on EUR50.9m), 1.26% (on EUR70.0m), 2.00% (on EUR74.1m),
0.93% (on EUR29.0m), 2.45% (on EUR105.0m) and 1.42% (on EUR29.0m)
respectively. The Euro denominated borrowings provide a natural
hedge against the Group's investment in the Paris, Spain and
Benelux businesses.
The 2026 (GBP35.0m), 2028 (GBP20.0m), 2029 (GBP50.5m), 2029
(GBP30.0m), 2031 (GBP80.0m) US Private Placement Notes are
denominated in Sterling and attract a fixed interest rate of 2.59%,
1.96%, 2.92%, 2.69% and 2.39% respectively.
As a result of the hedging arrangements and fixed interest loan
notes, effectively 84% of the Group's drawn debt is at fixed rates
of interest. Overall, the Group has an effective interest rate on
its borrowings of 2.77% at 30 April 2023, compared to 2.41% at the
previous year end.
Non-underlying finance charge
Interest on finance leases was GBP2.6m (H1 2022: GBP2.5m) and
reflects part of the leasehold rental payment. The balance of the
leasehold payment is charged through the gain or loss on investment
properties line and variable lease payments in the income
statement. Overall, the leasehold rent charge increased by GBP0.7m
to GBP7.2m in H1 2023 (H1 2022: GBP6.5m). A net loss of GBP1.4m was
recognised on fair valuation of derivatives (H1 2022: net gain of
GBP0.8m).
The Group undertakes net investment hedge accounting for its
Euro denominated loan notes.
Tax
The tax charge for the period is analysed below:
Tax charge H1 2023 H1 2022
GBP'm GBP'm
Underlying current
tax 2.6 2.6
Prior year - exceptional - 0.9
Current tax charge 2.6 3.5
-------- --------
Tax on investment properties
movement 8.0 11.7
Deferred tax charge 8.0 11.7
-------- --------
Net tax charge 10.6 15.2
======== ========
Income tax in the period was a net charge of GBP10.6m (H1 2022:
GBP15.2m).
In the UK, the Group is a REIT, so the current tax charge
relates to the Paris, Spain and Netherlands businesses. The
underlying current tax charge for the period amounted to GBP2.6m
(H1 2022: GBP2.6m).
Profit after tax
The profit after tax for the period was GBP92.8m, compared with
GBP270.0m in H1 2022, a decrease of GBP177.2m which arose
principally due to the decreased gain on investment properties,
which is explained above.
Basic EPS was 42.9 pence (H1 2022: 128.1 pence) and diluted EPS
was 42.7 pence (H1 2022: 124.5 pence). As explained in note 2 to
the financial statements, management considers adjusted diluted
EPRA EPS to be more representative of the underlying EPS
performance of the business.
Dividends
The Board has announced an interim dividend of 9.9 pence per
share, representing a 5.3% increase from the interim dividend paid
last year of 9.4 pence. This will amount to a dividend payment of
GBP21.6m (H1 2022: GBP19.8m). The dividend will be paid on 10
August 2023 to shareholders who are on the Company's register at
the close of business on 7 July 2023. The ex-dividend date will be
6 July 2023. 25% (H1 2022: 25%) of the dividend will be paid as a
REIT Property Income Distribution ("PID").
Property Valuation
As discussed above, a sample of the Group's largest properties,
representing approximately 43% of the value of the Group's
investment property, has been valued by the Group's external
valuers and the Directors have prepared estimates of fair values
for the remaining 57% of the Group's investment property
portfolio.
UK Paris Spain Benelux Total Paris Spain Benelux
GBP'm GBP'm GBP'm GBP'm GBP'm EUR'm EUR'm EUR'm
Value as at 1 November
2022 1,756.8 538.1 27.3 135.6 2,457.8 625.9 31.9 157.7
Currency translation
movement - 10.4 0.4 2.6 13.4
Additions 16.9 3.3 5.6 7.4 33.2 3.7 6.3 8.5
Reclassifications 7.2 - 22.7 - 29.9 - 25.8 -
Revaluation 24.4 16.5 2.3 9.1 52.3 18.8 2.6 10.5
Value at 30 April
2023 1,805.3 568.3 58.3 154.7 2,586.6 648.4 66.6 176.7
======== ====== ====== ======== ======== ====== ====== ========
The table above summarises the movement in the valuations of the
Group's investment property portfolio excluding investment
properties under construction.
The exchange rate at 30 April 2023 was EUR1.141:GBP1 compared to
EUR1.163:GBP1 at 31 October 2022. This movement in the foreign
exchange rate has resulted in a GBP13.4m positive currency
translation movement in the period.
The Group's property portfolio valuation excluding investment
properties under construction has increased by GBP128.8m from the
valuation of GBP2,457.8m at 31 October 2022. This reflects the gain
on valuation of GBP52.3m, which is explained above, GBP63.1m
relating to additions, store refurbishments and reclassifications
as well as GBP13.4m of favourable foreign exchange movements on the
translation of the European portfolios. On a like-for like basis
the portfolio increased 2.7%.
The EPRA basic NTA per share, as reconciled to IFRS net assets
per share in financial statements, was 848 pence at 30 April 2023,
31 October 2022 (848 pence), and the IFRS reported NAV per share
was 845 pence (FY2022: 820 pence), reflecting a GBP54.9m increase
in reported net assets since 31 October 2022.
Gearing and Capital Structure
As at 30 April 2023, the Group's borrowings comprised bank
borrowing facilities, made up of revolving facilities in the UK as
well as US Private Placements.
Net debt (including finance leases and cash) stood at GBP776.6m
at 30 April 2023, an increase of GBP78.3m during the period, from
GBP698.3m at 31 October 2022, principally due to increased funding
required for store acquisitions and developments. Total capital
(net debt plus equity) increased from GBP2,491.7m at 31 October
2022 to GBP2,624.9m at 30 April 2023. The net impact is that the
gearing ratio has increased to 29.6% at 30 April 2023 from 28.0% at
31 October 2022.
Management also measures gearing with reference to its loan to
value ("LTV") ratio defined as net debt (excluding lease
liabilities) as a proportion of the valuation of investment
properties and investment properties under construction (excluding
finance leases). At 30 April 2023, the Group LTV ratio was 25.3%
compared with 23.6% at 31 October 2022. The Board considers the
current level of gearing is appropriate for the business to enable
the Group to increase returns on equity, maintain financial
flexibility and to achieve our medium term strategic
objectives.
As at 30 April 2023, GBP172.9m of the GBP400.0m UK revolver were
drawn. Including the US Private Placement debt of EUR358.0m
(GBP313.7m) and GBP215.5m, the Group's borrowings totalled
GBP702.1m (before adjustment for unamortised finance costs). As at
30 April 2023, the weighted average remaining term for the Group's
committed borrowing facilities is 5.5 years, including the new RCF
signed in November 2022.
Borrowings under the existing loan facilities are subject to
certain financial covenants. The UK bank facilities and the US
Private Placement share interest cover and LTV covenants. The
interest cover requirement of EBITDA:interest is 2.4:1, where it
will remain until the end of the facilities' terms. Interest cover
for the rolling twelve month period to 30 April 2023 is 10.8x
(FY2022: 11.4x) , calculated on the basis required under our
financial covenants.
The LTV covenant is 60% for the Group, where it will remain
until the end of the facilities' terms. As at 30 April 2023, there
is significant headroom in the Group LTV covenant calculations. The
Group is in compliance with its covenants at 30 April 2023 and,
based on forecast projections (which considered a number of
factors, including the current balance sheet position, the
principal and emerging risks which could impact the performance of
the Group, and the Group's strategic and financial plan), is
expected to be in compliance for a period in excess of twelve
months from the date of this report and accordingly, this interim
statement is prepared on the basis of going concern.
Cash flow
The table below sets out the cash flow of the business in H1
2022 and H1 2023.
H1 2023 H1 2022
GBP'm GBP'm
Underlying
EBITDA 69.7 65.2
Working capital/ exceptionals/
other (19.8) (0.1)
Adjusted operating cash
inflow 49.9 65.1
Interest payments (7.1) (5.0)
Leasehold rent payments (7.2) (6.5)
Tax payments (3.7) (2.9)
Free cash flow (before investing and
financing activities) 31.9 50.7
Acquisition of subsidiaries,
net of cash acquired - (111.5)
Investment in associates (1.5) (0.7)
Capital expenditure - investment
properties (62.2) (44.7)
Capital expenditure - property,
plant and equipment (0.5) (0.3)
Net proceeds from disposal of land - 1.0
Adjusted net cash flow
after investing activities (32.3) (105.5)
Issues of share capital 0.3 -
Dividends paid (37.7) (31.9)
Net drawdown of borrowings 71.1 141.1
Swap termination income 0.4 0.5
Debt issuance costs (4.3) (0.1)
Net (decrease)/increase
in cash (2.5) 4.1
======== ========
Note: Free cash flow is a non-GAAP measure, defined as cash flow
before investing and financing activities but after leasehold rent
payments.
Adjusted operating cash flow decreased by GBP15.2m in the
period. The movement in working capital is primarily associated
with settlement of employment related taxes connected with the
maturity of the five and three-year share based payment schemes at
the end of 2022 and early 2023 respectively, and other trade
receivable and payables timings. These are partly offset by the
GBP4.5m increase in underlying EBITDA.
Interest payments increased compared to the prior half year as a
result of the increased interest charge associated with the
additional borrowings to fund the capital expenditure on new stores
and development of the existing portfolio.
Tax paid during the period increased by GBP0.8m principally due
to increased payments on account associated with the stronger
European performance. As a result, free cash flow (before investing
and financing activities) decreased by GBP18.8m to GBP31.9m (H1
2022: GBP50.7m).
Investing activities generated a net outflow of GBP64.2m (H1
2022: net outflow of GBP156.2m) from capital expenditure on new
stores and development of the existing portfolio. In the prior
year, the capital expenditure outflow predominantly related to the
acquisition of the remaining 80% of the Joint Venture with Carlyle
Europe Realty. Of the GBP62.2m cash outflow on investment
properties, GBP59.4m (H1 2022: GBP42.5m) was spent on new stores
and development of the existing portfolio, with the balance
principally spent on capital maintenance.
Dividends paid to shareholders increased from GBP31.9m in H1
2022 to GBP37.7m in H1 2023, and the Group drew a net GBP71.1m of
borrowings, primarily to finance capital expenditure.
The first table below reconciles free cash flow (before
investing and financing activities) in the table above to net cash
inflow from operating activities in the consolidated cash flow
statement. The second table below reconciles adjusted net cash flow
after investing activities in the table above to the consolidated
cash flow statement.
H1 2023 H1 2022
GBP'm GBP'm
Free cash flow (before investing
and financing activities) 31.9 50.7
Addback: Finance lease principal payments 4.4 4.0
Net cash inflow from operating activities 36.3 54.7
H1 2023 H1 2022
GBP'm GBP'm
From table
above:
Adjusted net cash flow after investing
activities (32.3) (105.5)
Addback: Finance lease principal
payments 4.4 4.0
Net cash outflow after investing
activities (27.9) (101.5)
From consolidated cash
flow:
Net cash inflow from
operating activities 36.3 54.7
Net cash outflow from investing
activities (64.2) (156.2)
Net cash outflow after investing activities (27.9) (101.5)
Financial Reporting Council
During the half year to 30 April 2023, the Board received
correspondence from the Financial Reporting Council ("FRC")
concerning the payment of the 2022 interim dividend. Although the
Company had adequate distributable reserves to cover this interim
dividend, paid on 11 August 2022, the Company had not made the
relevant filings at Companies House in respect of the payment of
these interim dividends. In order to rectify the situation, the
Company intends to file the required interim accounts for the
Company and propose resolutions at its 2024 AGM to approve deeds of
release between the Company and each of its shareholders and
directors. The Company has also taken the necessary steps to ensure
that procedural issues do not arise in future in relation to the
payment of dividends. The FRC has acknowledged this remedy as
appropriate.
Consolidated income statement
for the six months ended 30 April 2023
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Revenue 4,5 110.1 101.0 212.5
Cost of sales (34.5) (29.1) (63.0)
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Gross profit 75.6 71.9 149.5
Administrative expenses (8.0) (13.4) (27.1)
Share of (loss)/profit in associate - (0.3) (0.3)
Underlying EBITDA 5 69.7 65.2 135.1
Exceptional items 6 - - (0.1)
Share-based payments (1.3) (6.0) (11.2)
Depreciation and variable lease payments (0.8) (0.5) (1.3)
Share of associate's depreciation, interest and tax - (0.5) (0.4)
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Operating profit before gain on investment properties and other
exceptional gains 67.6 58.2 122.1
Gain on investment properties 13 47.3 223.9 381.6
Other exceptional gains 6 - 10.5 10.8
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Operating profit 114.9 292.6 514.5
Finance income 7 0.5 0.7 2.0
Finance expense 7 (12.0) (8.1) (17.7)
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Profit before income tax 5 103.4 285.2 498.8
Income tax charge 8 (10.6) (15.2) (35.9)
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Profit for the period 92.8 270.0 462.9
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Earnings per share for profit attributable to the equity holders
--------------------------------------------------------------------- ----- ------------ ------------ ------------
- basic (pence) 11 42.9 128.1 219.5
--------------------------------------------------------------------- ----- ------------ ------------ ------------
- diluted (pence) 11 42.7 124.5 212.4
--------------------------------------------------------------------- ----- ------------ ------------ ------------
All items in the income statement relate to continuing
operations.
Underlying EBITDA is an Alternative Performance Measure and is
defined as operating profit before exceptional items, share-based
payments, corporate transaction costs, gain/loss on investment
properties, depreciation and variable lease payments and the share
of associate's depreciation, interest and tax.
An interim dividend of 9.9 pence per ordinary share has been
declared for the period ended 30 April 2023 (30 April 2022: 9.4
pence).
Consolidated statement of comprehensive income
for the six months ended 30 April 2023
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------------------------------------- ----------- ----------- -----------
Profit for the period 92.8 270.0 462.9
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss:
Currency translation differences 9.2 (3.1) 8.0
Net investment hedge (3.8) 0.7 (4.6)
Total other comprehensive income / (expense) net of tax 5.4 (2.4) 3.4
---------------------------------------------------------------- ----------- ----------- -----------
Total comprehensive income for the period 98.2 267.6 466.3
---------------------------------------------------------------- ----------- ----------- -----------
Consolidated balance sheet
as at 30 April 2023
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
-------------------------------------------------------------- ---- ----------- ----------- ----------
Non-current assets
Investment in associates 12 3.3 1.8 1.8
-------------------------------------------------------------- ---- ----------- ----------- ----------
Fair value of investment properties, net of lease liabilities 2,586.6 2,271.1 2,457.8
Add-back of lease liabilities 97.3 82.6 95.1
Investment properties under construction 93.7 60.9 94.5
-------------------------------------------------------------- ---- ----------- ----------- ----------
Total investment properties 13 2,777.6 2,414.6 2,647.4
Property, plant and equipment 3.2 3.0 3.4
Derivative financial instruments 17 - 0.8 -
Deferred tax assets 9 0.8 1.5 0.8
2,784.9 2,421.7 2,653.4
-------------------------------------------------------------- ---- ----------- ----------- ----------
Current assets
Inventories 0.4 0.4 0.3
Derivative financial instruments 17 0.3 1.4 1.7
Trade and other receivables 36.0 27.8 31.2
Current income tax assets 0.2 - -
Cash and cash equivalents 18.1 46.8 20.9
-------------------------------------------------------------- ---- ----------- ----------- ----------
55.0 76.4 54.1
-------------------------------------------------------------- ---- ----------- ----------- ----------
Total assets 2,839.9 2,498.1 2,707.5
-------------------------------------------------------------- ---- ----------- ----------- ----------
Current liabilities
Bank Borrowings 16 - - (101.7)
Derivative financial instruments 17 - (0.1) -
Trade and other payables (54.9) (66.3) (62.7)
Current income tax liabilities - (0.9) (0.8)
Obligations under lease liabilities (13.1) (12.5) (13.2)
(68.0) (79.8) (178.4)
-------------------------------------------------------------- ---- ----------- ----------- ----------
Non-current liabilities
Bank borrowings 16 (697.2) (624.3) (522.1)
Deferred tax liabilities 9 (139.4) (112.8) (129.0)
Obligations under lease liabilities (84.4) (70.3) (82.2)
Provisions 21 (2.6) (2.2) (2.4)
(923.6) (809.6) (735.7)
-------------------------------------------------------------- ---- ----------- ----------- ----------
Total liabilities (991.6) (889.4) (914.1)
-------------------------------------------------------------- ---- ----------- ----------- ----------
Net assets 1,848.3 1,608.7 1,793.4
-------------------------------------------------------------- ---- ----------- ----------- ----------
Shareholders' equity
Ordinary shares 18 2.2 2.1 2.1
Share premium 62.0 61.3 61.8
Translation reserve 13.9 2.7 8.5
Retained earnings 1,770.2 1,542.6 1,721.0
-------------------------------------------------------------- ---- ----------- ----------- ----------
Total equity 1,848.3 1,608.7 1,793.4
-------------------------------------------------------------- ---- ----------- ----------- ----------
The notes set out below form an integral part of this condensed
consolidated interim financial information.
Condensed consolidated statement of changes in equity
for the six months ended 30 April 2023
Share Share Translation Retained Total
capital Premium reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
------------------------------ --------- --------- ------------ ---------- --------
Balance at 1 November 2022 2.1 61.8 8.5 1,721.0 1,793.4
Total comprehensive income
for the period - - 5.4 92.8 98.2
Transactions with owners
in their capacity as owner:
Dividends (note 10) - - - (44.5) (44.5)
Increase in share capital 0.1 0.2 - - 0.3
Employee share options - - - 0.9 0.9
------------------------------ --------- --------- ------------ ---------- --------
Balance at 30 April 2023 2.2 62.0 13.9 1,770.2 1,848.3
------------------------------ --------- --------- ------------ ---------- --------
Condensed consolidated statement of changes in equity
for the six months ended 30 April 2022
Share Share Translation Retained Total
capital premium reserve earnings Equity
GBPm GBPm GBPm GBPm GBPm
------------------------------ --------- --------- ------------ ---------- --------
Balance at 1 November 2021 2.1 61.3 5.1 1,306.4 1,374.9
Total comprehensive income
for the period - - (2.4) 270.0 267.6
Transactions with owners
in their capacity as owner:
Dividends (note 10) - - - (37.1) (37.1)
Increase in share capital - - - - -
Employee share options - - - 3.3 3.3
--------- --------- ------------ ---------- --------
Balance at 30 April 2022 2.1 61.3 2.7 1,542.6 1,608.7
------------------------------ --------- --------- ------------ ---------- --------
Condensed consolidated statement of changes in equity
for the year ended 31 October 2022
Share Share Translation Retained Total
capital premium reserve earnings Equity
GBPm GBPm GBPm GBPm GBPm
------------------------------ --------- --------- ------------ ---------- --------
Balance at 1 November 2021 2.1 61.3 5.1 1,306.4 1,374.9
Total comprehensive income
for the year - - 3.4 462.9 466.3
Transactions with owners
in their capacity as owner:
Dividends (note 10) - - - (56.9) (56.9)
Increase in share capital - 0.5 - - 0.5
Employee share options - - - 8.6 8.6
------------------------------ --------- --------- ------------ ---------- --------
Balance at 31 October
2022 2.1 61.8 8.5 1,721.0 1,793.4
------------------------------ --------- --------- ------------ ---------- --------
Consolidated cash flow statement
for the six months ended 30 April 2023
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------------- ----------- ----------- -----------
Profit before income tax 103.4 285.2 498.8
Gain on the revaluation of investment properties (47.3) (223.9) (381.6)
Other exceptional gains - (10.5) (10.8)
Share of loss in associate - 0.3 0.3
Depreciation 0.6 0.5 1.0
Net finance expense 11.5 7.4 15.7
Employee share options 1.0 3.3 8.6
(Increase)/decrease in inventories (0.1) 0.1 0.2
(Increase)/decrease in trade and other receivables (4.2) (1.2) 0.1
(Decrease)/increase in trade and other payables (15.4) 3.8 (0.4)
Increase in provision 0.2 0.1 0.3
Cash flows from operating activities 49.7 65.1 132.2
------------------------------------------------------- ----------- ----------- -----------
Interest received - 0.8 0.1
Interest paid (9.7) (8.3) (16.9)
Tax paid (3.7) (2.9) (5.6)
------------------------------------------------------- ----------- ----------- -----------
Net cash inflow from operating activities 36.3 54.7 109.8
------------------------------------------------------- ----------- ----------- -----------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - (111.5) (111.5)
Investment in associates (1.5) (0.7) (0.8)
Expenditure on investment and development properties (62.2) (44.7) (95.2)
Proceeds from sale of investment properties - - 6.4
Proceeds from sale of land - 1.0 1.0
Purchase of property, plant and equipment (0.5) (0.3) (1.0)
Proceeds from sale of property, plant and equipment - - 0.2
Net cash (outflow) from investing activities (64.2) (156.2) (200.9)
------------------------------------------------------- ----------- ----------- -----------
Cash flows from financing activities
Issue of share capital 0.3 - 0.5
Equity dividends paid (37.7) (31.9) (56.9)
Proceeds from borrowings 176.2 241.1 266.1
Repayment of borrowings (105.1) (100.0) (134.0)
Debt issuance costs (4.4) (0.1) (0.1)
Financial instruments income 0.4 - 1.3
Swap termination income - 0.5 0.5
Principal payment of lease liabilities (4.3) (4.0) (8.4)
Net cash inflow/ from financing activities 25.4 105.6 69.0
------------------------------------------------------- ----------- ----------- -----------
Net (decrease) / increase in cash and cash equivalents (2.5) 4.1 (22.1)
Exchange loss on cash and cash equivalents (0.3) (0.5) (0.2)
Opening cash and cash equivalents 20.9 43.2 43.2
------------------------------------------------------- ----------- ----------- -----------
Closing cash and cash equivalents 18.1 46.8 20.9
------------------------------------------------------- ----------- ----------- -----------
econciliation of net cash flow to movement in net debt
for the six months ended 30 April 2023
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------------------------------- ----------- ----------- -----------
Net increase in cash and cash equivalents (after exchange adjustments) (2.8) 3.6 (22.3)
Increase in debt financing (75.5) (140.1) (152.2)
----------------------------------------------------------------------- ----------- ----------- -----------
(Increase)/decrease in net debt (78.3) (136.5) (174.5)
Net debt at start of period (698.3) (523.8) (523.8)
----------------------------------------------------------------------- ----------- ----------- -----------
Net debt at end of period (776.6) (660.3) (698.3)
----------------------------------------------------------------------- ----------- ----------- -----------
Notes to the interim report for the six months ended 30 April
2023
1 General information
The Company is a public limited company incorporated and
domiciled in the UK. The address of its registered office is
Brittanic House, Stirling Way, Borehamwood, Hertfordshire WD6
2BT.
The Company is listed on the London Stock Exchange.
This interim report was approved for issue on 13 June 2023.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. The full accounts of Safestore Holdings
plc for the year ended 31 October 2022, which received an
unqualified report from the auditors, and did not contain a
statement under S.498(2) or (3) of the Companies Act 2006, were
filed with the Registrar of Companies on 23 March 2023.
This condensed consolidated interim financial information for 30
April 2023 and 30 April 2022 is unaudited. The interim financial
information for 30 April 2023 has been reviewed by the auditors and
their Independent Review report is included within this financial
information.
2 Basis of preparation
The condensed consolidated interim financial information for the
six months ended 30 April 2023 has been prepared in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority and with United Kingdom adopted
International Accounting Standard 34 'Interim Financial Reporting'
(IAS 34).
The Directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than twelve months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing this condensed consolidated interim financial
information.
In assessing the Group's going concern position as at 30 April
2023, the Directors have considered a number of factors, including
the net current liability balance sheet position, the principal and
emerging risks which could impact the performance of the Group and
the Group's strategic and financial plan. Consideration has been
given to compliance with borrowing covenants along with the
uncertainty inherent in future financial forecasts. The Directors
considered the most recent three-year outlook approved by the
Board. In the context of the current environment, four plausible
scenarios 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 cost-of-living and the conflict in
Ukraine. These scenarios are differentiated by the impact of demand
and enquiry levels, average rate growth and the level of cost
savings. A scenario was also performed where a reverse stress test
was carried out 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. In November 2022, the Group
completed the refinancing of its Revolving Credit Facilities
("RCF") which were due to expire in June 2023. The previous GBP250
million and EUR70 million revolving credit facilities have been
replaced with a single multi-currency unsecured GBP400 million
facility, with a four-year term with two one-year extension options
(available headroom GBP227m). The impact of these scenarios has
been reviewed against the Group's projected cash flow position and
financial covenants over a three-year period. Should any of these
scenarios, which are differentiated by the impact of demand and
enquiry levels, average rate growth and the level of cost savings
occur, clear mitigating actions are available to ensure that the
Group remains liquid and able to meet its liabilities as they fall
due. The financial position of the Group, including details of its
financing and capital structure, is set out in the financial review
section of this announcement.
Further details of the Group's viability statement is included
in page 44 of the Annual Report and Financial Statements for the
year ended 31 October 2022.
The assessment concluded that, for the foreseeable future, the
Group has sufficient capital to support its operations; has a
funding and liquidity base which is strong, robust and well managed
with substantial future capacity and has expectations that
performance will continue to improve as the Group's strategy is
executed.
The condensed consolidated interim financial information should
be read in conjunction with the annual financial statements for the
year ended 31 October 2022, which have been prepared in accordance
with IFRS.
Non-GAAP financial information
The Directors have identified certain measures that they believe
will assist the understanding of the performance of the business.
The measures are not defined under IFRS and they may not be
directly comparable with other companies' adjusted measures. The
non-GAAP measures are not intended to be a substitute for, or
superior to, any IFRS measures of performance but they have been
included as the Directors consider them to be important comparables
and key measures used within the business for assessing
performance. The following are the key non-GAAP measures identified
by the Group:
-- The Group defines exceptional items to be those that warrant,
by virtue of their nature, size or frequency, separate disclosure
on the face of the income statement where, in the opinion of the
Directors, this enhances the understanding of the Group's financial
performance.
-- Underlying EBITDA is an Alternative Performance Measure and
is defined as operating profit before exceptional items,
share-based payments, corporate transaction costs, gain/loss on
investment properties, depreciation and variable lease payments and
the share of associate's depreciation, interest and tax. Management
considers this presentation to be representative of the underlying
performance of the business, as it removes the income statement
impact of items not fully controllable by management, such as the
revaluation of derivatives and investment properties, and the
impact of exceptional credits, costs and finance charges. A
reconciliation of statutory operating profit to Underlying EBITDA
can be found in the financial review section of this
announcement.
-- Adjusted Diluted EPRA EPS is based on the European Public
Real Estate Association's ("EPRA") definition of earnings and is
defined as profit or loss for the period after tax but excluding
corporate transaction costs, change in fair value of derivatives,
gain/loss on investment properties and the associated tax impacts.
The Company then makes further company-specific adjustments for the
impact of exceptional items, net exchange gains/losses recognised
in net finance costs, exceptional tax items, and deferred and
current tax in respect of these adjustments. The Company also
adjusts for IFRS 2 share-based payment charges. This adjusted
earnings is divided by the diluted number of shares. The IFRS 2
cost is excluded as it is written back to distributable reserves
and is a non-cash item (with the exception of the associated
National Insurance element). Therefore, neither the Company's
ability to distribute nor pay dividends are impacted (with the
exception of the associated National Insurance element). The
financial statements disclose earnings on a statutory, EPRA and
Adjusted Diluted EPRA basis and will provide a full reconciliation
of the differences in the financial year in which any LTIP awards
may vest. A reconciliation of statutory basic earnings per share to
Adjusted Diluted EPRA EPS can be found in note 11.
-- EPRA's Best Practices Recommendations guidelines for Net
Asset Value ("NAV") metrics are EPRA Net Tangible Assets ("NTA"),
EPRA Net Reinstatement Value ("NRV") and EPRA Net Disposal Value
("NDV"). EPRA NTA is considered to be the most relevant measure for
the Group's business which provides sustainable long term
progressive returns and is now the primary measure of net assets.
The basis of calculation, including a reconciliation to reported
net assets, is set out in note 15.
-- Like-for-like figures are presented to aid in the
comparability of the underlying business as they exclude the impact
on results of purchased, sold, opened or closed stores.
-- Constant exchange rate (CER) figures are provided in order to
present results on a more comparable basis, removing foreign
exchange movements.
3 Accounting policies
The condensed consolidated interim financial information has
been prepared on the basis of the accounting policies expected to
apply for the financial year to 31 October 2023 and the same as
applied for the Group's Financial Statements for the Full Year
October 2022 applicable to companies under IFRS.
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
certain critical accounting estimates. It also requires management
to exercise judgement in the process of applying the Company's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the condensed consolidated interim financial
statements are disclosed within the Group's accounting policies as
disclosed in the IFRS financial statements for the year ended 31
October 2022. There have been no other significant changes in
accounting estimates in the period.
The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in the Group's latest financial statements.
The nature of the Critical Accounting Judgements and Key Sources of
Estimation Uncertainty applied in the condensed financial
statements have remained consistent with those applied in the
Group's latest annual audited financial statements.
4 Revenue
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------- ----------- ----------- -----------
Self storage income 92.4 84.6 178.0
Insurance income 12.1 11.3 23.9
Other non-storage income 5.6 5.1 10.6
Total revenue 110.1 101.0 212.5
------------------------- ----------- ----------- -----------
5 Segmental information
The segmental information for the six months ended 30 April 2023
is as follows:
United Paris Spain Benelux Total
Kingdom
GBPm GBPm GBPm GBPm GBPm
-------------------------------- --------- ------ ------ -------- --------
Continuing operations
Revenue 81.7 21.8 1.7 4.9 110.1
-------------------------------- --------- ------ ------ -------- --------
Underlying EBITDA 51.9 14.9 0.6 2.3 69.7
Share-based payments (1.2) (0.1) - - (1.3)
Depreciation and variable
lease payments (0.7) (0.1) - - (0.8)
Operating profit before
gain on investment properties
and other exceptional gains 50.0 14.7 0.6 2.3 67.6
Gain on investment properties 24.5 14.4 2.1 6.3 47.3
Operating profit 74.5 29.1 2.7 8.6 114.9
Net finance (expense)/
income (10.8) (0.6) (0.1) - (11.5)
-------------------------------- --------- ------ ------ -------- --------
Profit before income tax 63.7 28.5 2.6 8.6 103.4
-------------------------------- --------- ------ ------ -------- --------
Total assets 2,143.9 586.2 30.7 79.1 2,839.9
-------------------------------- --------- ------ ------ -------- --------
The segmental information for the six months ended 30 April 2022
is as follows:
United Paris Spain Benelux Total
Kingdom
GBPm GBPm GBPm GBPm GBPm
------------------------------------ --------- ------ ------ -------- --------
Continuing operations
Revenue 78.9 20.0 1.4 0.7 101.0
------------------------------------ --------- ------ ------ -------- --------
Underlying EBITDA 50.3 13.8 0.8 0.3 65.2
Share-based payments (5.3) (0.7) - - (6.0)
Depreciation and variable
lease payments (0.4) (0.1) - - (0.5)
Share of associate's depreciation, (0.5) - - -
interest and tax
------------------------------------ --------- ------ ------ -------- --------
Operating profit before
gain on investment properties
and other exceptional gains 44.1 13.0 0.8 0.3 58.2
Gain on investment properties 183.0 40.5 0.4 - 223.9
Other exceptional gains 5.5 5.0 - - 10.5
Operating profit 232.6 58.5 1.2 0.3 292.6
Net finance expense (7.1) (0.8) - 0.5 (7.4)
------------------------------------ --------- ------ ------ -------- --------
Profit before income tax 225.5 57.7 1.2 0.8 285.2
------------------------------------ --------- ------ ------ -------- --------
Total assets 1,887.5 519.3 26.7 64.6 2,498.1
------------------------------------ --------- ------ ------ -------- --------
Underlying EBITDA is defined as operating profit before
exceptional items, share-based payments, corporate transaction
costs, gain/loss on investment properties, depreciation and
variable lease payments and the share of associate's depreciation,
interest and tax
6 Exceptional items and other exceptional gains
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------ ------------ ----------- -----------
Costs relating to corporate transactions
and exceptional property taxation - - (0.1)
Exceptional items - - (0.1)
------------------------------------------ ------------ ----------- -----------
Valuation gain on associate buy-out - 5.5 5.5
Gain on disposal of investment properties - - 0.2
Gain on disposal of land - 5.0 5.1
------------------------------------------ ------------ ----------- -----------
Other exceptional gains - 10.5 10.8
------------------------------------------ ------------ ----------- -----------
There are no exceptional items in the current period.
On 10 November 2021, the Group sold the Nanterre site to the
joint venture partner of Nanterre FOCD 92 for a total price of
EUR7.6m excluding VAT and including demolition cost reimbursement,
where the settlement is done partially in cash GBP1.0m (EUR1.1m
excluding tax), and partially in kind through the delivery of the
new building at the end of the operation (estimated at EUR6.5m).
This resulted in a net gain on disposal of GBP5.0m (EUR5.9m)
included within other exceptional gains in the prior period .
On 30 March 2022, the Group acquired the remaining 80% equity of
Safestore Storage Benelux B.V. from its previous joint venture
partner for EUR53.6 million (GBP45.3 million) and became a wholly
owned subsidiary. The original 20% equity investment was
effectively de-recognised and re-recognised back at the fair value
based on the revised equity value effective at the 30 March 2022
transaction. This resulted in a valuation gain on the associate
buy-out of GBP5.5 million included within other exceptional gains
in the prior period.
7 Finance income and costs
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------ ----------- ----------- -----------
Finance income
Interest receivable from loan to associates - 0.1 0.1
Other interest received 0.1 0.1 0.1
Financial instruments income 0.4 - 1.3
Underlying finance income 0.5 0.2 1.5
Exceptional finance income - 0.5 0.5
Total finance income 0.5 0.7 2.0
------------------------------------------------ ----------- ----------- -----------
Finance costs
Interest payable on bank loans and overdrafts (7.3) (5.8) (11.9)
Amortisation of debt issuance costs on
bank loans (0.7) (0.3) (0.5)
------------------------------------------------ ----------- ----------- -----------
Underlying finance charges (8.0) (6.1) (12.4)
Interest on obligations under lease liabilities (2.6) (2.5) (5.0)
Fair value movement on derivatives (1.4) 0.8 (0.3)
Net exchange losses - (0.3) -
Total finance costs (12.0) (8.1) (17.7)
------------------------------------------------ ----------- ----------- -----------
Net finance costs (11.5) (7.4) (15.7)
------------------------------------------------ ----------- ----------- -----------
The change in fair value of derivatives for the period is a net
loss of GBP1.4m (30 April 2022: net gain of GBP0.8m). Included
within finance income is GBP0.4m (30 April 2022: GBPnil) on
settlement of the FX forwards held by the Group.
8 Income tax charge
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------- ----------- ----------- -----------
Current tax - current year 2.6 2.6 6.1
Current tax - current year exceptional - 0.9 -
Deferred tax 8.0 11.7 29.8
10.6 15.2 35.9
--------------------------------------- ----------- ----------- -----------
Income tax is recognised based on management's best estimate of
the weighted average annual income tax rate expected for the full
financial year.
In the UK, the Group is a Real Estate Investment Trust ("REIT").
As a result, the Group is exempt from UK corporation tax on the
profits and gains arising from its qualifying property 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 main rate of corporation tax in the UK is 25%. Accordingly,
the Group's results for this accounting period are taxed at an
effective rate of 18% (30 April 2022: 19%). The main rate of
corporation tax in the UK increased from 19% to 25% from 1 April
2023. There is no deferred taxation impact in respect of this
change in taxation rate.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
In the prior year, an exceptional charge of GBP0.9m arose during
the period in relation to the capital gain on disposal of the
Nanterre site to the joint venture partner of Nanterre FOCD 92
(note 6).
9 Deferred income tax
As at As at As at
30 April 30 April 31 October 2022
2023 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------------------------------- ----------- ----------- ----------------
The amounts provided in the accounts are:
Revaluation of investment properties and tax depreciation 139.4 112.8 129.0
Deferred tax liabilities 139.4 112.8 129.0
---------------------------------------------------------- ----------- ----------- ----------------
Other timing differences 0.8 1.5 0.8
---------------------------------------------------------- ----------- ----------- ----------------
Deferred tax assets 0.8 1.5 0.8
---------------------------------------------------------- ----------- ----------- ----------------
Net deferred tax liability 138.6 111.3 128.2
---------------------------------------------------------- ----------- ----------- ----------------
As at 30 April 2023, the Group had income losses of GBP41.0m (30
April 2022: GBP23.4m) and capital losses of GBP36.4m (30 April
2022: GBP36.4m) in respect of its UK operations. All losses can be
carried forward indefinitely. No deferred tax asset has been
recognised in respect of these losses.
10 Dividends
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------------------------- ----------- ----------- -----------
For the year ended 31 October 2021:
Final dividend - paid 7 April 2022 (17.60p per share) - 37.1 37.1
For the year ended 31 October 2022
Interim dividend - paid 11 August 2022 (9.40p per share) - - 19.8
Final dividend - paid 7 April 2023 (20.40p per share) 44.5 - -
Dividends in the statement of changes in equity 44.5 37.1 56.9
Timing difference on payment of withholding tax (6.8) (5.2)
--------------------------------------------------------- ----------- ----------- -----------
Dividends in the cash flow statement 37.7 31.9 56.9
--------------------------------------------------------- ----------- ----------- -----------
An interim dividend of 9.9 pence per ordinary share (April 2022:
9.4 pence) has been declared. The ex-dividend date will be 6 July
2023 and the record date 7 July 2023, with an intended payment date
of 10 August 2023.
It is intended that 25% (April 2022: 25%) of the interim
dividend of 9.9 pence per ordinary share (April 2022: 9.4 pence)
will be paid as a REIT Property Income Distribution ("PID") net of
withholding tax where appropriate.
The interim dividend, amounting to GBP21.6m (April 2022:
GBP19.8m), has not been included as a liability at 30 April 2023.
It will be recognised in shareholders' equity in the year to 31
October 2023.
11 Earnings per ordinary share
Basic earnings per share has been calculated by dividing the
profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the
period/year excluding ordinary shares held by the Safestore
Employee Benefit Trust. Diluted earnings per share are calculated
by adjusting the weighted average numbers of ordinary shares to
assume conversion of all dilutive potential shares. The Company has
one category of dilutive potential ordinary shares: share options.
For the share options, a calculation is done to determine the
number of shares that could have been acquired at fair value
(determined as the average annual market price of the Company's
shares) based on the monetary value of the subscription rights
attached to the outstanding share options. The number of shares
calculated as above is compared with the number of shares that
would have been issued assuming the exercise of the share
options.
Six months ended Six months ended Year ended
30 April 2023 30 April 2022 31 October 2022
(unaudited) (unaudited) (audited)
Earnings Shares Pence Earnings Shares Pence Earnings Shares Pence
GBPm million per GBPm million per share GBPm million per
share share
--------------- -------- -------- ------ -------- -------- ---------- -------- -------- ------
Basic 92.8 216.5 42.9 270.0 210.8 128.1 462.9 210.9 219.5
Dilutive share
options - 0.8 (0.2) - 6.1 (3.6) - 7.0 (7.1)
--------------- -------- -------- ------ -------- -------- ---------- -------- -------- ------
Diluted 92.8 217.3 42.7 270.0 216.9 124.5 462.9 217.9 212.4
--------------- -------- -------- ------ -------- -------- ---------- -------- -------- ------
Adjusted earnings per share
Adjusted earnings per share represents profit after tax adjusted
for the valuation movement on investment properties, exceptional
items, change in fair value of derivatives and the associated tax
thereon. As an industry standard measure, European Public Real
Estate Association ("EPRA") earnings are presented below. Adjusted
diluted earnings are also presented by adding back the share-based
payment charge to the EPRA earnings. The Directors consider that
these alternative measures provide useful information on the
performance of the Group.
Six months ended Six months ended Year ended
30 April 2023 30 April 2022 31 October 2022
(unaudited) (unaudited) (audited)
Earnings/(loss) Shares Pence Earnings/ Shares Pence Earnings/ Shares Pence
GBPm million per (loss) million per share (loss) million per
share GBPm GBPm share
-------------------- --------------- -------- ------ --------- -------- ---------- --------- -------- -------
Basic 92.8 216.5 42.9 270.0 210.8 128.1 462.9 210.9 219.5
Adjustments:
Gain on investment
properties (47.3) - (21.9) (223.9) - (106.2) (381.6) - (180.9)
Exceptional items - - - - - - 0.1 - -
Other exceptional
gains - - - (10.5) - (5.0) (10.8) - (5.1)
Exceptional finance
income - - - (0.5) - (0.2) (0.5) - (0.2)
Net exchange loss - - - 0.3 - 0.1 - - -
Gain in fair value
of derivatives 1.4 - 0.6 (0.8) - (0.4) 0.3 - 0.1
Tax on adjustments
and exceptional
tax 7.4 - 3.4 12.1 - 5.7 29.7 - 14.1
-------------------- --------------- -------- ------ --------- -------- ---------- --------- -------- -------
Adjusted 54.3 216.5 25.0 46.7 210.8 22.1 100.1 210.9 47.5
EPRA adjusted:
Fair value
re-measurement
of lease
liabilities
add-back (4.4) - (2.0) (4.0) - (1.9) (8.3) - (3.9)
Tax on lease
liabilities
add-back adjustment 0.6 - 0.3 0.5 - 0.2 1.0 - 0.5
-------------------- --------------- -------- ------ --------- -------- ---------- --------- -------- -------
Adjusted EPRA
basic EPS 50.5 216.5 23.3 43.2 210.8 20.4 92.8 210.9 44.1
Share-based payment
charge 1.3 - 0.6 6.0 - 2.8 11.2 - 5.3
Dilutive shares - 2.5 (0.2) - 7.8 (0.7) - 8.0 (1.9)
-------------------- --------------- -------- ------ --------- -------- ---------- --------- -------- -------
Adjusted Diluted
EPRA EPS 51.8 219.0 23.7 49.2 218.6 22.5 104.0 218.9 47.5
-------------------- --------------- -------- ------ --------- -------- ---------- --------- -------- -------
The definition of Adjusted Diluted EPRA EPS can be found in note
2 to the financial statements, being based on the EPRA definition
of earnings with company adjustments for specific items such as for
the impact of exceptional items, IFRS 2 share-based payment
charges, and deferred tax charges .
Gain on investment properties includes the fair value
re-measurement of lease liabilities add-back of GBP4.4m (30 April
2022: GBP4.0m) and the related tax thereon of GBP0.6m (30 April
2022: GBP0.5m). As an industry standard measure, EPRA earnings is
presented. EPRA earnings of GBP50.5m (30 April 2022: GBP43.2m) and
EPRA earnings per share of 23.3 pence (30 April 2022: 20.4 pence)
are calculated after further adjusting for these items.
12 Investment in associates
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------- ------------ ------------ ------------
Investment in associates 3.3 1.8 1.8
-------------------------- ------------ ------------ ------------
PBC Les Groues SAS
The Group has a 24.9% interest in PBC Les Groues SAS ("PBC"), a
company registered and operating in France. PBC is accounted for
using the equity method of accounting. PBC is the parent company of
Nanterre FOCD 92, a company also registered and operating in
France, which is developing a new store as part of a wider
development programme located in Paris. The development project is
managed by its joint venture partners, therefore the Group has no
operational liability during this phase. During the current period
there has been no material investment in the company (30 April
2022: GBP0.8m). The investment is considered immaterial relative to
the Group's underlying operations.
The aggregate carrying value of the Group's interest in PBC was
GBP1.8m (30 April 2022: GBP1.8m), made up of an investment of
GBP1.8m (30 April 2022: GBP1.8m). The Group's share of profits from
continuing operations for the period was GBPnil (30 April 2022:
GBPnil). The Group's share of total comprehensive income of
associates for the period was GBPnil (30 April 2022: GBPnil).
CERF II German Storage Topco S.a.r.l.
On 1 December 2022 the Group acquired a 10.0% interest in CERF
II German Storage Topco S.a.r.l. (CERF II), a company registered in
Luxembourg for which the Group has board representation. The
reporting date of the financial statements for the company is 31
December. CERF II is accounted for using the equity method of
accounting. Safestore entered the German Self Storage market via a
new investment with Carlyle which acquired the myStorage
business.
The aggregate carrying value of the Group's interest in CERF II
was GBP1.5m (30 April 2022: GBPnil), made up of an investment of
GBP1.5m (30 April 2022: GBPnil). The Group's share of profits from
continuing operations for the period was GBPnil (30 April 2022:
GBPnil). The Group's share of total comprehensive income of
associates for the period was GBPnil (30 April 2022: GBPnil).
13 Investment properties
Fair value of investment Add-back of Investment Total
properties, net of lease lease liabilities properties under investment
liabilities construction properties
GBPm GBPm GBPm GBPm
--------------------------- -------------------------- ------------------- -------------------------- ------------
Balance at 1 November 2022 2,457.8 95.1 94.5 2,647.4
Additions 33.2 9.0 29.0 71.2
Disposals - (3.1) - (3.1)
Reclassification 29.9 (29.9) -
Revaluation movement 52.3 - (0.6) 51.7
Fair value re-measurement
of lease liabilities
add-back - (4.4) - (4.4)
Exchange movements 13.4 0.7 0.7 14.8
--------------------------- -------------------------- ------------------- -------------------------- ------------
Balance at 30 April 2023 2,586.6 97.3 93.7 2,777.6
--------------------------- -------------------------- ------------------- -------------------------- ------------
Fair value of Add-back of Investment Total
investment properties, lease liabilities properties under investment
net of lease construction properties
liabilities
GBPm GBPm GBPm GBPm
------------------------- ------------------------ ------------------- ------------------------ --------------
Balance at 1 November
2021 1,881.8 82.1 67.4 2,031.3
Additions 15.7 4.1 12.0 31.8
Acquisition of
subsidiaries 132.1 0.6 - 132.7
Reclassification 16.5 - (16.5) -
Revaluation movement 229.8 - (1.9) 227.9
Fair value
re-measurement of lease
liabilities add-back - (4.0) - (4.0)
Exchange movements (4.8) (0.2) (0.1) (5.1)
------------------------- ------------------------ ------------------- ------------------------ --------------
Balance at 30 April 2022 2,271.1 82.6 60.9 2,414.6
------------------------- ------------------------ ------------------- ------------------------ --------------
The gain on investment properties of GBP47.3m (30 April 2022:
GBP223.9m) as disclosed in the consolidated income statement
comprises a GBP51.7m (30 April 2022: GBP227.9m) revaluation gain on
investment properties, net of lease liabilities and investment
properties under construction less the fair value re-measurement of
lease liabilities add-back of GBP4.4m (30 April 2022: GBP4.0m).
The Group has classified investment property and investment
property under construction, held at fair value, within Level 3 of
the fair value hierarchy. There were no transfers to or from Level
3 during the period. The fair valuation exercise undertaken at 30
April 2023 is explained in note 14.
The fair value of investment property held by the Group
classified as the add-back of lease liabilities of GBP97.3m (30
April 2022: GBP82.6m) reflects expected cash flows (including rent
reviews settled that are expected to become payable). Accordingly,
if a valuation obtained for a property is net of all payments
expected to be made, it will be necessary to add-back any
recognised lease liability, to arrive at the carrying amount of the
investment property using the fair value model under IAS 40. The
lease liability of GBP97.5m (30 April 2022: GBP82.8m) differs by
GBP0.2m (30 April 2022: GBP0.2m) which relates to the right-of-use
asset classified as part of property, plant and equipment
14 Valuations
External valuation
A sample of the Group's largest properties, representing
approximately 43% of the value of the Group's investment property
portfolio at 31 October 2022, has been valued by the Group's
external valuers, C&W, as at 30 April 2023. The valuation has
been carried out in accordance with the requirements of the RICS
Valuation - Global Standards which incorporate the International
Valuation Standards ("IVS") and the RICS Valuation UK National
Supplement (the "RICS Red Book") edition current at 30 April 2023.
The valuation of each of the investment properties has been
prepared on the basis of fair value as a fully equipped operational
entity, having regard to trading potential. The valuation has been
provided for accounts purposes and, as such, is a Regulated Purpose
Valuation as defined in the Red Book. In compliance with the
disclosure requirements of the Red Book, C&W has confirmed
that:
-- the member of the RICS who has been the signatory to the
valuations provided to the Group for the same purposes as previous
valuations, has done so since April 2020;
-- C&W has been carrying out regular valuations for the same
purpose as this valuation on behalf of the Group since October
2006;
-- C&W does not provide other significant professional or agency services to the Group;
-- The proportion of fees payable by the Group to C&W to the
total fee income of C&W's last financial year to 31 December
2022, was less than 5%. We anticipate that the proportion of fees
for the financial year to 31 December 2023 will remain at less than
5%; and
-- the fee payable to C&W is a fixed amount per property and
is not contingent on the appraised value.
Further details of the valuation carried out by C&W as at 31
October 2022, including the valuation method and assumptions, are
set out in note 13 to the Group's annual report and financial
statements for the year ended 31 October 2022. This note should be
read in conjunction with note 13 of the Group's annual report.
Directors' valuation
In addition, at the same date, the Directors have prepared
estimates of fair values for the remaining 57% of the Group's
investment property portfolio, incorporating assumptions for
estimated absorption, revenue growth and capitalisation rates to
reflect current market conditions and trading.
Assumptions
The key assumptions incorporated into both the external
valuation and the Directors' valuation, calculated on a weighted
average basis across the entire portfolio, are:
-- Net operating income is based on projected revenue received
less projected operating costs together with a central
administration charge of 6% of the estimated annual revenue subject
to a cap and collar. The initial net operating income is calculated
by estimating the net operating income in the first twelve months
following the valuation date.
-- The net operating income in future years is calculated
assuming either straight line absorption from day one actual
occupancy or variable absorption over years one to four of the cash
flow period, to an estimated stabilised/mature occupancy level. In
the valuations the assumed stabilised occupancy level for the
trading stores (both freeholds and all leaseholds) open at 30 April
2023 averages 89.23% (31 October 2022: 89.18%). 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 16.18 months (31 October 2022: 18.51
months).
-- The capitalisation rates applied to existing and future net
cash flows have been estimated by reference to underlying yields
for industrial and retail warehouse property, yields for other
trading property types such as student housing and hotels, bank
base rates, ten year money rates, inflation and the available
evidence of transactions in the sector. The valuations included in
the accounts assume rental growth in future periods. If an
assumption of no rental growth is applied to the valuations, the
net initial yield pre-administration expenses for the mature stores
(i.e., excluding those stores categorised as "developing") is 5.88
% (31 October 2022: 6.08%), rising to stabilised net yield
pre-administration expenses of 6.71% (31 October 2022: 6.74%).
-- The weighted average freehold exit yield on UK freeholds is
5.76% ( 31 October 2022: 5.74% ), France freeholds is 6.04% ( 31
October 2022: 5.96% ) and on Spain freeholds is 5.50% ( 31 October
2022: 5.50% ). The weighted average freehold exit yield for all
freeholds adopted 5.75% ( 31 October 2022: 5.66% ).
-- 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 leaseholds) in
the UK portfolio is 8.52% ( 31 October 2022: 8.40% ) in the France
portfolio is 8.91% ( 31 October 2022: 8.78% ) and in the Spain
portfolio is 8.34% ( 31 October 2022: 8.00% ). The weighted average
annual discount rate adopted (for both freeholds and all
leaseholds) is 8.57% ( 31 October 2022: 8.49% ).
-- Purchaser's costs in the range of approximately 3.3% to 6.8%
for the UK, 7.5% for Paris and 2.5% for Spain have been assumed
initially, reflecting the progressive SDLT rates brought into force
in March 2016 in the UK, and sales plus purchaser's costs totalling
approximately 5.3% to 8.8% (UK), 9.5% (Paris) and 4.5% (Spain) are
assumed on the notional sales in the tenth year in relation to
freehold and long leasehold stores.
All other factors being equal, higher net operating income would
lead to an increase in the valuation of a store and an increase in
the capitalisation rate or discount rate would result in a lower
valuation, and vice versa. Higher assumptions for stabilised
occupancy, absorption rate, rental rate and other revenue, and a
lower assumption for operating costs, would result in an increase
in projected net operating income, and thus an increase in
valuation.
As a result of these exercises, as at 30 April 2023, the Group's
investment property portfolio has been valued at GBP2,586.6m (30
April 2022: GBP2,271.1m), and a revaluation gain of GBP52.3m (30
April 2022: GBP229.8m) has been recognised in the income statement
for the period.
A full external valuation of the Group's investment property
portfolio will be performed at 31 October 2023.
Sensitivity analysis
As part of the Directors valuation, a key sensitivity analysis
was performed to understand the impact on the entire property
portfolio in relation to capitalisation yields, stable occupancy
rates, and a delay in the time to stabilised occupancy. The impact
on the valuation would be mitigated by the inter-relationship
between inputs moving in opposite directions. For example, an
increase in stable occupancy may be offset by an increase yield,
resulting in no net impact on the valuation. A sensitivity analysis
showing the impact on valuations of changes in capitalisation rates
and stable occupancy is shown below:
Impact of a change Impact of a delay
Impact of change in in stabilised occupancy in stabilised occupancy
capitalisation rates assumption assumption
GBP'm GBP'm GBP'm
--------- -------------------------------- -------------------------- ------------------------
25 bps decrease 25 bps increase 1% increase 1% decrease 24-month delay
--------- --------------- --------------- ------------ ------------ ------------------------
Reported
Group 106.0 (97.0) 36.7 (33.5) (29.3)
--------- --------------- --------------- ------------ ------------ ------------------------
15 Net assets per share
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
Analysis of net asset value GBPm GBPm GBPm
--------------------------------------------------------------------- ----------- ----------- -----------
Balance sheet net assets 1,848.3 1,608.7 1,793.4
Adjustments to exclude:
Fair value of derivative financial instruments (net of deferred tax) (0.3) (2.1) (1.7)
Deferred tax liabilities on the revaluation of investment properties 139.4 112.8 129.0
--------------------------------------------------------------------- ----------- ----------- -----------
EPRA NTA 1,987.4 1,719.4 1,920.7
--------------------------------------------------------------------- ----------- ----------- -----------
Basic net assets per share (pence) 848 763 848
EPRA basic NTA per share (pence) 912 816 908
Diluted net assets per share (pence) 845 742 820
EPRA diluted NTA per share (pence) 909 793 879
--------------------------------------------------------------------- ----------- ----------- -----------
Number Number Number
--------------------------------------------------------------------- ----------- ----------- -----------
Shares in issue 218,006,528 210,825,202 211,927,497
--------------------------------------------------------------------- ----------- ----------- -----------
Basic net assets per share is shareholders' funds divided by the
number of shares at the period end. The number of shares in issue
at the period end excludes 145,493 shares (30 April 2022: 1,902
shares) held by the Safestore Employee Benefit Trust. Diluted net
assets per share is shareholders' funds divided by the number of
shares at the period end, adjusted for dilutive share options of
821,170 shares (30 April 2022: 6,087,545 shares).
16 Borrowings
The tables below set out the Group's borrowings position as at
30 April 2023:
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
Non-current GBPm GBPm GBPm
-------------------------------------- ------------ ------------ ------------
Borrowings:
Secured - bank loans 172.9 110.2 101.8
Secured - US Private placement notes 529.2 515.7 523.3
Debt issue costs (4.9) (1.6) (1.3)
-------------------------------------- ------------ ------------ ------------
697.2 624.3 623.8
-------------------------------------- ------------ ------------ ------------
On 11 November 2022, the Group completed the refinancing of its
RCFs which were due to expire in June 2023. The previous GBP250.0
million Sterling and EUR70.0 million Euro RCFs have been replaced
with a single multi-currency GBP400 million facility. In addition,
a further GBP100 million uncommitted accordion facility is
incorporated in the facility agreement. The facility is for a
four-year term with two one-year extension options exercisable
after the first and second years of the agreement.
US Private Placement Notes of EUR358m have maturities extending
to 2024, 2026, 2027, 2028, 2029 and 2033 and GBP215.5m which have
maturities extending to 2026, 2028, 2029 and 2031.
Borrowings are stated before unamortised issue costs of GBP4.9m
(30 April 2022: GBP1.6m). The bank loans and private placement
notes were repayable as follows:
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------- ------------ ------------ ------------
Within one year - - 101.8
Between one and two years 44.6 110.2 43.8
Between two and five years 334.2 136.4 158.9
After more than five years 323.3 379.3 320.6
---------------------------- ------------ ------------ ------------
Borrowings 702.1 625.9 625.1
Unamortised issue costs (4.9) (1.6) (1.3)
---------------------------- ------------ ------------ ------------
697.2 624.3 623.8
---------------------------- ------------ ------------ ------------
For accounting periods starting from 1 January 2020 the
benchmark Interbank Offered Rates ("IBORs"), such as LIBOR, have
been replaced by new official benchmark rates, known as alternative
risk free rates ("RFR"). The RFR that has been introduced
applicable to the Group is the Standard Overnight Index Average
("SONIA").
The effective interest rates at the balance sheet date were as
follows:
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
----------------------- -------------------- ------------------ ------------------
Bank loans (Sterling) Monthly, quarterly Quarterly or Quarterly or
or six monthly monthly SONIA monthly SONIA
SONIA plus 1.25% plus 1.25% plus 1.25%
Bank loans (Euro) Monthly, quarterly Quarterly EURIBOR Quarterly EURIBOR
or six monthly plus 1.25% plus 1.25%
EURIBOR plus 1.25%
Private placement Weighted average Weighted average Weighted average
notes (Euro) rate of 1.80% rate of 1.80% rate of 1.80%
Private placement
notes (Sterling) 2.55% 2.55% 2.55%
----------------------- -------------------- ------------------ ------------------
Borrowing facilities
The Group has the following undrawn committed borrowing
facilities available at the period end in respect of which all
conditions precedent had been met at that date:
Floating rate
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Expiring within one year - - 208.4
Expiring beyond one year 227.1 198.5 -
-------------------------- ------------ ------------ ------------
17 Financial instruments
IFRS 13 requires disclosure of fair value measurements by level
of the following measurement hierarchy:
Level 1 - unadjusted quoted prices in active markets for
identical assets or liabilities.
Level 2 - inputs other than quoted prices included within Level
1 that are observable for the asset of liability, either directly
or indirectly.
Level 3 - inputs for the asset of liability that are not based
on observable market data.
The table below shows the level in the fair value hierarchy into
which fair value measurements have been categorised:
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
Assets per the balance sheet GBPm GBPm GBPm
------------------------------------ ------------ ------------ ------------
Derivative financial instruments -
Level 2 0.4 2.2 1.7
------------------------------------ ------------ ------------ ------------
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
Liabilities per the balance sheet GBPm GBPm GBPm
----------------------------------- ------------ ------------ ------------
Derivative financial instruments - - 0.1 -
Level 2
----------------------------------- ------------ ------------ ------------
The fair value of financial instruments that are not traded in
an active market, such as over-the-counter derivatives, is
determined using valuation techniques. The Group obtains such
valuations from counterparties who use a variety of assumptions
based on market conditions existing at each balance sheet date. The
valuation techniques maximise the use of observable market data
where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in
level 2.
If one or more of the significant inputs is not based on
observable market data, the asset or liability is included in level
3. The Group has no disclosable level 3 financial instruments.
There have been no transfers of assets or liabilities between
levels of the fair value hierarchy.
18 Share capital
As at As at As at
30 April 30 April 31 October
2023 2022 2022
(unaudited) (unaudited) (audited)
Called up, issued and fully paid GBPm GBPm GBPm
----------------------------------------- ------------ ------------ ------------
218,006,528 (30 April 2022: 210,827104)
ordinary shares of 1p each 2.2 2.1 2.1
----------------------------------------- ------------ ------------ ------------
19 Capital commitments
The Group had capital commitments of GBP134.0m as at 30 April
2023 (30 April 2022: GBP108.0m).
20 Related party transactions
The Group's shares are widely held. Transactions between the
Company and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
Transactions with PBC Les Groues SAS
As described in note 12, the Group has a 24.9% interest in PBC
Les Groues SAS ("PBC"). During the period, the Group made a further
investment GBP0.02m (EUR0.02m) into PBC to fund the development of
a new store in France, taking the total investment to GBP1.8m
(EUR2.2m). The total amount invested is included as part of its
non-current investments in associates. The total amount outstanding
at 30 April 2023 included within trade and other receivables was
GBPnil (30 April 2022: GBPnil).
As described in note 6, in the prior period, the Group sold the
Nanterre site to the joint venture partner of Nanterre FOCD 92 for
a total price of EUR7.6m excluding VAT and including demolition
cost reimbursement, where the settlement was done partially in cash
GBP1.0m (EUR1.1m excluding tax), and partially in kind through the
delivery of the new building at the end of the operation (estimated
at EUR6.5m).
Transactions with CERF II German Storage Topco S.a.r.l.
As described in note 12, the Group has a 10% investment in CERF
II German Storage Topco S.a.r.l.. During the period to April 2023
the Group recharged GBP0.2m of management fees.
Transactions with Safestore Storage Benelux B.V. (formerly CERF
Storage JV B.V.)
The Group had a 20% interest in Safestore Storage Benelux B.V.
("SSB") up until 30 March 2022 and was classified as an investment
in associate. From 30 March 2022, SSB became a wholly owned
subsidiary of the Group, from which point such intra-group
transactions and balances are eliminated on consolidation.
21 Provisions
In France, the basis on which property taxes have been assessed
has been challenged by the tax authority for financial years 2012
to 2013 and 2016 onwards. In March 2021 the French Court of Appeal
(COA) delivered a judgement in respect of years 2012 and 2013,
which resulted in a partial success for the Group. A further appeal
was lodged with the French Supreme Court (SC) against those
decisions on which the Group was unsuccessful, but this was
unsuccessful following decisions released by the SC in H1 2023. The
outcome for 2012 and 2013 is therefore final. A provision is
included in the consolidated financial accounts of GBP2.6m at 30
April 2023 (31 October 2022: GBP2.4m), to reflect the increased
uncertainty surrounding the likelihood of a successful outcome for
years 2016 onwards, which are subject to separate litigation. Of
the total provided, GBP0.2m has been charged in relation to 6
months to 30 April 2023 (30 April 2022: GBP0.1m) within cost of
sales (underlying EBITDA).
It is possible that the French tax authority may pursue claims
for 2016 onwards in respect of matters on which the Group were
successful in the French Supreme Court for 2012 and 2013. The
maximum potential further exposure in relation to these issues at
30 April 2023 is GBP2.8m (31 October 2022: GBP2.8m). No provision
for any potential further exposure has been recorded in the
consolidated financial statements since the Group believes it is
more likely than not that a successful outcome will be achieved,
resulting in no additional liabilities.
Bank guarantees to cover any potential additional tax assessment
are currently being put in place, of which guarantees totalling
GBP1.3m are in place as at 30 April 2023 (31 October 2022:
GBP1.2m).
22 Contingent liabilities
The Group has a contingent liability in respect of property
taxation in the French subsidiary as disclosed in note 21.
Principal risks and uncertainties
The delivery of our strategic objectives is dependent on
effective risk management. There are a number of potential risks
and uncertainties which could have a material impact on the Group's
performance and could cause actual results to differ materially
from expected and historical results. Details of the principal
risks facing the Group were included on pages 37 to 42 of the
Annual Report and Financial Statements for the year ended 31
October 2022, a copy of which is available at www.safestore.com ,
and include:
-- Strategic risks
-- Pandemic risk
-- Finance risk
-- Treasury risk
-- Property investment and development risk
-- Valuation risk
-- Occupancy risk
-- Real estate investment trust ("REIT") risk
-- Catastrophic event risk
-- Regulatory compliance risk
-- Marketing risk
-- IT security/GDPR
-- Brand and Reputational risk
-- Geographical expansion
-- Human resource risk
-- Climate change related risk
The Company regularly assesses these risks together with the
associated mitigating factors listed in the 2022 Annual Report. The
levels of activity in the Group's markets and the level of
financial liquidity and flexibility continue to be the areas
designated as appropriate for added management focus.
We continue to believe that our market leading position in the
UK and Paris, our strong brand and depth of management, as well as
our retail expertise and infrastructure, help mitigate the effects
of fluctuations in the economy or the housing market. Furthermore,
the UK self storage market remains immature with little risk of
supply outstripping demand in the medium term.
Our prudent approach on new stores reduces our dependence on the
number of non-trading investment properties in relation to the
established and mature stores that provide relatively stable and
growing cash flow. The Board regularly reviews the cash
requirements of the business, including the covenant position
although given the nature of the product, customer base and lack of
working capital requirements, liquidity is not considered to be a
significant risk.
The Outlook section of this half yearly report provides a
commentary concerning the remainder of the financial year.
Forward-looking statements
Certain statements in this interim results announcement are
forward-looking statements. By their nature, forward-looking
statements involve a number of risks, uncertainties or assumptions
that could cause actual results or events to differ materially from
those expressed or implied by the forward-looking statements. These
risks, uncertainties or assumptions could adversely affect the
outcome and financial effects of the plans and events described
herein. Forward-looking statements contained in this interim
results announcement regarding past trends or activities should not
be taken as a representation that such trends or activities will
continue in the future. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
interim results announcement. Except as required by law, the
Company is under no obligation to update or keep current the
forward-looking statements contained in this interim results
announcement or to correct any inaccuracies which may become
apparent in such forward-looking statements.
Statement of Directors' responsibilities for the six months
ended 30 April 2023
The Directors confirm that, to the best of their knowledge, this
condensed consolidated interim financial information has been
prepared in accordance with IAS 34 as contained in the United
Kingdom adopted IFRS and that the interim management report
includes a fair review of the information required by DTR 4.2.4R,
DTR 4.2.7R and DTR 4.2.8R, namely:
-- the condensed set of financial statements gives a true and
fair view of the assets, liabilities, financial position and profit
or loss of Safestore Holdings plc, or the undertakings included in
the consolidation;
-- an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
A list of current Directors is maintained on the Safestore
Holdings plc website, www.safestore.com .
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
By order of the Board
Frederic Vecchioli Andrew Jones
13 June 2023 13 June 2023
Chief Executive Officer Chief Financial Officer
INDEPENT REVIEW REPORT TO SAFESTORE HOLDINGS PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 April 2023 which comprises consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated balance sheet, the condensed consolidated statement of
changes in equity, the consolidated cash flow statement and related
notes 1 to 22.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
April 2023 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the Group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
13 June 2023
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