TIDMSAFE
RNS Number : 5567P
Safestore Holdings plc
21 June 2022
21 June 2022
Safestore Holdings plc
("Safestore", "the Company" or "the Group")
Interim results for the 6 months ended 30 April 2022
Continuing excellent performance, strong strategic progress and
EPS ahead of consensus
Key Measures 6 months 6 months Change(1) Change-CER
ended 30 ended (2)
April 2022 30 April
2021
--------------------------------- ------------ ---------- ---------- -----------
Underlying and Operating
Metrics- total
Revenue GBP101.0m GBP88.1m 14.6% 15.9%
Underlying EBITDA(3) GBP65.2m GBP54.4m 19.9% 21.1%
Closing Occupancy (let sq
ft- million)(4) 6.186 5.635 9.8% n/a
Closing Occupancy (% of MLA)(5) 80.7% 80.7% - n/a
Average Storage Rate(6) GBP29.38 GBP26.51 10.8% 12.1%
Adjusted Diluted EPRA Earnings
per Share(7) 22.5p 18.1p 24.3% n/a
Free Cash flow(8) GBP50.7m GBP40.3m 25.8% n/a
EPRA NTA per Share(13) GBP7.93 GBP5.90 34.4% n/a
Underlying and Operating
Metrics- like-for-like (9)
Storage Revenue GBP83.3m GBP72.4m 15.1% 16.4%
Ancillary Revenue GBP15.8m GBP15.1m 4.6% 5.3%
Revenue GBP99.1m GBP87.5m 13.3% 14.5%
Underlying EBITDA(3) GBP64.2m GBP54.0m 18.9% 20.7%
Closing Occupancy (let sq
ft- million)(4) 5.656 5.596 1.1% n/a
Closing Occupancy (% of MLA)(5) 82.3% 81.9% +0.4ppts n/a
Average Occupancy (let sq
ft- million)(4) 5.659 5.495 3.0% n/a
Average Storage Rate(6) 29.69 26.57 11.7% 13.0%
Statutory Metrics
Operating Profit(10) GBP292.6m GBP173.2m 68.9% n/a
Profit before Income Tax(10) GBP285.2m GBP167.3m 70.5% n/a
Diluted Earnings per Share 124.5p 74.4p 67.3% n/a
Dividend per Share 9.4p 7.50p 25.3% n/a
Cash Inflow from Operating GBP54.7m GBP43.9m 24.6% n/a
Activities
Diluted net assets per share(13) GBP7.42 GBP5.49 35.2% n/a
Highlights
Excellent Financial Performance
-- Group revenue up 14.6% and in CER(2) up 15.9%
-- Group like-for-like(9) storage revenue in CER(2) up 16.4% and
like-for-like total revenue in CER(2) up 14.5%
-- Strong operational gearing driving growth in Adjusted Diluted
EPRA EPS(7) , up 24.3% at 22.5p (2021: 18.1p)
-- 25.3% increase in the interim dividend to 9.4p (2021: 7.5p)
reflecting improved profitability
-- Profit before income tax of GBP285.2m up from GBP167.3m in
2021 driven by strong trading performance and increased gain on
investment properties of GBP223.9m (2021: gain of GBP127.7m)
-- Strong conversion of profitability to cash with Cash Inflow
from Operating Activities up 24.6% to GBP54.7m
-- Adjusted Diluted EPRA Earnings per Share (7) expected to be at least 47p for the full year
Operational and Strategic Progress
-- Strong like-for-like operational performance
o Like-for-like(9) average storage rate for the period up 13.0%
in CER(2)
-- UK up 15.9% to GBP28.67 (2021: GBP24.73)
-- Paris up 4.6% to EUR40.44 (2021: EUR38.67)
-- Spain up 7.8% to EUR34.09 (2021: EUR31.61)
o Like-for-like(9) occupancy(4) up 0.4ppts at 82.3% (2021:
81.9%)
-- UK up 0.3ppts at 82.1% (2021: 81.8%)
-- Paris up 1.2ppts at 82.9% (2021: 81.7%)
-- Spain down 2.8ppts at 86.6% (2021: 89.4%)
-- Completed EPS accretive acquisition of remaining 80% of
equity owned by Carlyle in the Benelux JV(14) in March 2022 at an
Enterprise Value of EUR146m. The Benelux business consists of 15
high quality stores with an MLA of 600,000 sq ft in the Netherlands
and Belgium.
-- Acquisition of a single 14,000 sq ft satellite store from
Your Room Self Storage in Christchurch, Dorset, for an Enterprise
Value of GBP2.45m
-- New freehold development sites acquired
o Three in the greater Paris area subject to planning providing
a total of c. 134,000 sq ft.
o 58,000 sq ft site in Netherlands subject to planning
o Site in Wigan in Greater Manchester. Planned conversion of
existing building to a 42,700 sq ft new store
-- Opened c. 154,000 sq ft of new freehold space across the
London Bow (74,000 sq ft) and Nijmegen, Netherlands (40,000 sq ft)
sites and extensions of existing stores in London at Paddington
Marble Arch and Edgware and in Southend
-- Total Group development and extension pipeline now 23 stores and c. 983,000sq ft of MLA
Strong and Flexible Balance Sheet
-- Group loan-to-value ratio ("LTV"(11) ) at 27% (2021: 27%) and
interest cover ratio ("ICR"(12) ) at 10.0x (2021: 10.0x)
-- Unutilised bank facilities of GBP198.5m at 30 April 2022
-- In April 2022 the Group drew its US Private Placement
uncommitted Shelf debt facility to partially finance the
acquisition of the remaining equity in the Benelux JV. The
equivalent of GBP88.1m sterling denominated in Euros with a seven
year term was drawn at a rate of 2.45%
Frederic Vecchioli, Safestore's Chief Executive Officer,
commented:
"I am pleased to report a continuing excellent performance in
the period with strong average storage rates driving the results of
our UK, French and Spanish businesses.
Alongside the excellent operational performance we have made
further strong strategic progress and I was delighted that the
Group completed the acquisition of our partner Carlyle's 80% stake
in our Benelux JV in March 2022. Over the last three years we have
learnt much about the Netherlands and Belgian markets and feel
confident about the ongoing development of our presence in these
geographies. It is our intention to gradually increase our
footprint in these two markets.
Our freehold 74,000 sq ft London Bow store opened successfully
in December 2021 and we are extremely pleased with early trading.
The store is a conversion of an existing building and achieved 27%
occupancy and break-even point after just four months of trading.
In addition, we acquired a 14,000 sq ft freehold satellite store in
Christchurch, Dorset and added a new development site in Wigan,
Greater Manchester.
Our expansion in our European markets continues and our
Netherlands business recently completed the conversion of an
existing building in Nijmegen into a new 40,000 sq ft freehold
store. We have also recently added three freehold development sites
in Greater Paris and one in the Netherlands to complement our
existing pipeline.
Our performance in this period has demonstrated the strength of
our market leading platform and its ability to drive new lets and
revenue in multiple geographies. We continue to focus on the
significant upside from filling the 2.5m square feet of space in
our existing and pipeline stores. On average over the last six
years, the business has grown like-for-like revenue by 9.7% per
annum and its total revenue by 10.2% per annum. This strong history
of revenue growth and cost control, combined with the operational
gearing of the business model and our self-funded rigorous
investment policy, has allowed the group to deliver over the last 6
years an average Adjusted Diluted EPRA Earnings per Share growth of
16.3% per year. Our track record in customer acquisition, occupancy
and revenue management, combined with our existing available
lettable space, our new store pipeline and self-funding capacity,
should allow the business, in the absence of significant
macro-economic disruption, to deliver consistent growth for the
foreseeable future.
Whilst performance in the first half of the year has been very
strong we are conscious of the inflationary and cost of living
pressures ahead. We have assessed our cost base and construction
projects in the light of these factors and feel confident that we
have the yield management capability and cost discipline to
mitigate the likely cost inflation and are comfortable that our
current pipeline projects will continue to deliver returns ahead of
our internal hurdle rates.
Finally, I would like to thank all our colleagues in the UK,
France, Spain, the Netherlands and Belgium, for their commitment
and resilience, and for how they have responded to the
unprecedented challenges caused by the Covid-19 crisis over the
last two years. 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 2022, closing occupancy includes 14,000 sq ft of bulk
tenancy (30 April 2021: 14,000 sq ft).
5 - MLA is Maximum Lettable Area. At 30 April 2022, Group MLA
was 7.67m sq ft (30 April 2021: 6.98m 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 2022
acquisition of the Netherlands and Belgium Joint Venture, the 2022
acquisition of Christchurch, the 2022 opening of Bow, the 2021
openings of Birmingham Middleway and Magenta in Paris and the 2021
closure of Birmingham South.
10 - Operating profit increased by GBP119.4m to GBP292.6m (30
April 2021: GBP173.2m) compared to last year, principally as a
result of an increase in the gain on Investment properties of
GBP96.2m to GBP223.9m (30 April 2021: GBP127.7m) and an increase of
GBP10.8m in Underlying EBITDA as a result of stronger trading
performance. Profit before income tax additionally included
exceptional items of GBP10.5m, being other exceptional gains.
GBP5.5m relating to the net gain recognised on the deemed disposal
of 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 relates 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 gross
debt (excluding finance leases) as a proportion of the valuation of
investment properties and investment properties under construction
(excluding lease liabilities).
12 - ICR is interest cover ratio and is calculated as the ratio
of underlying EBITDA after leasehold rent to underlying finance
charges.
13 - EPRA basic NAV was superseded and transitioned to three new
measures: EPRA Net Reinstatement Value ("NRV"), EPRA Net Tangible
Assets ("NTA") and EPRA Net Disposal Value ("NDV") for periods
commencing 1 January 2020 or thereafter. Safestore considers EPRA
NTA to be the most consistent with the nature of the Group's
business. The basis of calculation, including a reconciliation to
reported net assets, is set out in note 15 of the Financial
Statements.
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 - As at the date of publication, the consensus of 10
analysts' forecasts of Adjusted EPRA EPS was 45.9p.
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 an excellent financial performance in
the first half of the financial year, driven by strong average
achieved storage rates(6) . Reported Group revenue increased 15.9%
at CER(2) with like-for-like(9) revenue at CER(2) growing by 14.5%.
The Group's like-for-like average rate at CER(2) grew by 13.0% with
like-for-like average occupancy(4) growing by 3.0%. Reflecting the
high degree of operating leverage from our fully invested estate,
the improved revenue performance has driven growth in like-for-like
EBITDA(3) margin, on a CER basis, of 3.5ppts to 64.9% (2021:
61.4%). Profit before income tax was up to GBP285.2m from GBP167.3m
in 2021 driven by strong trading performance and increased gain on
investment properties of GBP223.9m (2021: gain of GBP127.7m).
Our operational performance across all regions of the UK has
been excellent in the period resulting in a 16.8% increase in
like-for-like(9) revenue. Our yield management capabilities have
resulted in a strong like-for-like average storage rate(6) growth
at CER(2) of 15.9%. Average occupancy, driven by our industry
leading digital marketing platform, enquiry generation and store
team conversion, has again performed well across all regions of the
UK, particularly considering the strength of the prior year
performance, delivering growth of 3.2% in the period on a
like-for-like basis. Like-for-like(9) closing occupancy(4) at the
period end was up 0.3ppts at 82.1% (2021: 81.8%). Total revenue
growth of 17.4% reflected the strong like-for-like performance, the
2022 acquisition of Christchurch, the 2022 store opening of London
Bow and the 2021 store opening in Birmingham Middleway offset by
the closure of Birmingham Digbeth.
In Paris, our trading performance was strong with
like-for-like(9) revenue growing by 7.2%. This was driven by our
like-for-like average rate performance which increased by 4.6%
compared to the prior year with average occupancy growing by 2.7%.
Like-for-like(9) closing occupancy(4) at the period end was up
1.2ppts at 82.9% (2021: 81.7%).
Our Spanish business, which was acquired in December 2019,
contributed EUR1.7m of like-for-like revenue, up 10.2% compared to
the prior year. Closing occupancy(4) was down 2.8ppts at 86.6%
(2021: 89.4%) whilst the average storage rate(6) grew by 7.8% to
EUR34.09 (2021: EUR31.61). Ancillary revenues, an area of
particular focus, doubled compared to the prior year.
The Group completed the acquisition of the 80% of the equity in
the Benelux JV owned by Carlyle on 30 March 2022. As a result, our
Netherlands and Belgian businesses contributed one month of
revenues in the period on a fully owned basis. Prior to the
acquisition, the Group earned management fees and a 20% share of
the JV's profits.
Group underlying EBITDA of GBP65.2m increased 21.1% at CER(2) on
the prior year and 19.9% on a reported basis, reflecting the impact
of the 4.8% strengthening of the average Sterling to Euro exchange
rate, compared to the prior period, on the profit earned on our
Paris, Spain and Benelux businesses. Rent costs were flat in the
period and, as a result, adjusted diluted EPRA EPS(7) grew by 24.3%
in the period to 22.5p (2021: 18.1p).
Our property portfolio valuation (excluding investment
properties under construction) has increased by GBP389.3m since
October 2021 to GBP2,271.1m. The increase comprises GBP32.2m of
additions and reclassifications, a negative currency impact of
GBP4.8m, the acquisition of the Benelux and Your Room Self Storage
businesses of GBP132.1m and a GBP229.8m revaluation gain
(equivalent to 12.2% of the valuation at October 2021) driven by
reduced exit cap rates and strong operational performance of the
business. The Group's external valuers, Cushman & Wakefield
Debenham Tie Leung Limited ("C&W"), valued 39% of the portfolio
at April 2022 with a Directors' valuation being carried out, with
the assistance of C&W, on the remaining 61%.
Reflecting the Group's good trading performance, the Board is
pleased to recommend a 25.3% increase in the interim dividend to
9.4p per share (2021: 7.5p).
Outlook
Trading in the third quarter to date, driven by average rates,
has continued to be strong. Group like-for-like sales (CER) for the
month of May were up 10% on May 2021, which was slightly ahead of
our Board's expectations.
Whilst we are aware of the current macro-economic challenges,
our business model remains highly resilient with multiple drivers
of demand and we believe the Group, whilst not entirely immune from
any cost of living or inflationary issues, is strongly positioned
to withstand any downturn. At present, earnings for the full year
is anticipated to be at least 47p, slightly ahead of the current
consensus analysts' forecasts of Adjusted Diluted EPRA Earnings per
Share(7) for 2021/22 of 45.9p(15) .
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 178
stores at 30 April 2022, comprising 130 wholly owned stores in the
UK (including 72 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, 4 stores in Barcelona, 9
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 2022, Safestore had a maximum lettable area
("MLA") of 7.667 million sq ft (excluding the expansion pipeline
stores) of which 6.186 million sq ft was occupied.
-- Safestore employs around 750 people in the UK, Paris, Spain, the Netherlands and Belgium.
Our Strategy
The Group's proven strategy has evolved over the last three
years with the creation of our Benelux Joint Venture(14) and the
recent buy-out of the 80% of the equity previously owned by Carlyle
as well as our acquisition of OhMyBox ("OMB") in Spain, but
otherwise remains largely unchanged. We believe that the Group has
a well-located asset base, management expertise, infrastructure,
scale and balance sheet strength and, as we look forward, we
consider that the Group has the potential to 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 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 below.
Optimisation of Existing Portfolio
With the opening of 18 new stores since August 2016, and the
acquisitions of 47 stores through the purchases of Space Maker in
July 2016, Alligator in November 2017, Fort Box in London and OMB
in Spain in 2019, the buy-out of our Benelux JV in 2022 and our
Heathrow and Christchurch stores, we have established and
strengthened our market-leading portfolio in the UK and Paris and
have entered the Spanish, Netherlands and Belgian markets. We have
a high quality, fully invested estate in all geographies and, of
our 178 stores as at 30 April 2022, 101 are in London and the South
East of England or in Paris, with 77 in Spain, the Netherlands,
Belgium and the other major UK cities. In the UK, we now operate 49
stores within the M25, which represents a higher number of stores
than any other competitor.
Our MLA(4) has increased to 7.67m sq ft at 30 April 2022 (2021:
6.98m sq ft). At the current occupancy level of 80.7% we have 1.5m
sq ft of fully invested unoccupied space (2.5m sq ft including the
development pipeline), of which 1.0m sq ft is in our UK stores,
0.3m sq ft in Paris and 0.2m in Spain, the Netherlands and Belgium.
In total, this unlet space is the equivalent of c. 37 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 attractive rates, so we view this
availability of space with considerable optimism. We will also
benefit from 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. Between the full
financial years 2013 and 2021, occupancy of the stores in the
portfolio in 2013 that remain in the Group today has increased from
63.1% to 83.4%, i.e. an average of 2.4ppts per year and equivalent
to a total of 1.0 m 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). In the UK, many of our
new customers are using self-storage for the first time. 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 56% enquiry growth for the Group over the last five
years. 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 support customer
acquisition growth. Online enquiries in HY2022 rose to 89.7% of our
enquiries in the UK (HY2021: 89%) and 85.3% in France (HY2021:
83.3%). The majority of our online enquiries now originate from a
mobile device (65.5% share in HY2022), 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. UK enquiries increased by 2.3% whereas costs per
enquiry decreased by 2%. Group marketing costs as a percentage of
revenue were 3.5% for the half year (HY2021: 3.9%). This percentage
has constantly reduced over the last 8 years and is now at its
lowest level in that period.
During the first half of our 2021/22 trading year, the Group
demonstrated its ability to integrate newly developed and acquired
stores into its marketing platform with successful new openings at
Bow (London, UK), Christchurch (Dorset, UK) and Nijmegen
(Netherlands). We have now clearly demonstrated that our marketing
platform is transferrable into multiple overseas geographies.
In February 2022, Safestore UK won the Feefo Platinum Trusted
Service award for the third 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 HY2022,
achieved a 'TrustScore' of 4.6 out of 5. In Spain, OMB collects
customer feedback via Google reviews and has maintained a score of
4.7 out of 5.
Motivated and effective store teams benefiting from investment
in training and development
In what is still a relatively immature and poorly understood
product, 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.
The first half of our 2021/22 trading year has seen us move to a
business-as-usual operating model in stores although we still
display advisory mask and distancing messages along with safe
working protocols for both our customers and colleagues.
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 in-store trusted advisers is a fundamental part of
driving revenue growth and market share.
Safestore has been an Investors in People ("IIP") accredited
organisation since 2003 and our aim is to be an employer of choice
in our sector as we passionately believe that our continued success
is dependent on our highly motivated and well-trained colleagues.
Following the award of a Bronze standard accreditation in 2015 and
our subsequent Gold standard accreditation in 2018, Safestore was
awarded the "we invest in people" Platinum accreditation in
February 2021, the highest accolade in the Investors in People
scale. Shortly after our Platinum accreditation, we also made the
final top ten shortlist for the Platinum Employer of the Year
(250+) category in the Investors in People Awards 2021. This
nomination further endorses the high standard of our teams and the
people development programmes that drive our skill and talent
retention.
The Investors in People Platinum accreditation firmly places
Safestore in the top 2% of accredited organisations in the UK. The
accreditation panel commented: "There are real gains on all of the
indicators and individual themes compared to the survey conducted
three years ago, and the response rate of 93% is excellent.
Safestore are a fantastic example of sustained great practice." -
Matthew Filbee, IIP Practitioner.
IIP is the international standard for people management,
defining what it takes to lead, support and manage 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
14,000 organisations in 75 countries. This sustained people
development focus is an essential component of our continuous
improvement mentality.
We are committed to growing and rewarding our people and tailor
our development, reward and recognition programmes to this end. 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.
The period of the Covid-19 pandemic provided a challenging
environment requiring us to operate in some new and innovative
ways. Our online learning portal, combined with the energy and
flexibility of our store colleagues, allowed us to not only
continue to deliver our award-winning development programmes but
also to capitalise on the strength of our IT platforms. In the
first half of 2021 we rolled out our annual sales refresher
programme to every store colleague online, utilising some
innovative technologies along with more common communication tools
such as Microsoft Teams to once again raise our performance bar. As
the restrictions in the UK relaxed through the second half of 2021,
we were 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.
The recent lockdowns and travel restrictions have not inhibited
our progress as, following our late 2021 sales refreshers, we took
the opportunity to review many of our training, coaching and
compliance tools to take advantage of our higher performance levels
and skilled colleagues. The integration of flexible contract types
and enhanced digital contracts have all been included into our
updated version of QUEST, our sales framework. This two-day
programme has been delivered, face-to-face, to every member of our
store and field teams in the first half of 2022.
We recognised the changing needs and demands of our customers,
not only through the challenging times of 2020/21 but through the
newly emerging demands and requirements that late 2021 brought.
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 enhances our customer offer and
experience.
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 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. Delegates also have the opportunity to gain a nationally
recognised qualification from ILM (Institute of Leadership &
Management) at Level 3.
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. December 2019 also saw the inaugural launch of
our Senior Manager Development programme ("LEAD") which focuses on
developing our high performing middle 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 includes Level 5 accreditation from the Institute of Leadership
& Management upon successful completion. Our LEAD group
delegates are already delivering performance-enhancing projects to
our wider business and are fast heading towards their graduation
day in June 2022.
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 December
2018, allows our "People Champions" to be the representative voice
for each of the twelve Regions and Head Office in order to
influence change and drive improvement 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 Forum", raising
and representing the views of their colleagues; and
-- Consult with and discuss feedback with management and the leadership team at Safestore.
In December 2020, our People Champion positions were up for
re-election after our first group had successfully completed their
two-year tenure. Following a strongly contested election, our 15
new People Champions were elected and they are now nearing the end
of their tenure, having delivered more high-quality contributions
to our business.
Our Values and Behaviours framework concentrates our culture on
our customers. Customers continue to be at the heart of everything
we do, whether it be in store, online or in their communities. In
2021 we further improved our customer ratings when we were awarded
the Feefo Platinum trusted service award. Later in the year, we
received a 5 star Trustpilot rating, which we still hold in 2022.
Along with our strong Google ratings, these independent assessments
further reflect our ongoing commitment to customer satisfaction as
the number one storage provider in the UK.
Central Revenue Management and Cost Control
We continue to pursue a balanced approach to revenue management.
We aim to optimise revenue 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 the
ability, within a strict controlled environment, to offer a variety
of centrally set discounts including, in specific stores and size
codes, a Lowest Price Guarantee in the event that a local
competitor is offering a lower price. The reduction in the level of
discount offered over the last five years is linked to store team
variable incentives and is monitored closely by the central pricing
team.
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
the Head Office. Enhancements to cost control are continually
considered and the cost base is challenged on an ongoing basis.
Strong and Flexible Capital Structure
Since 2014 we have refinanced the business on five 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 2022, based on the current level of borrowings and
interest swap rates, the Group's weighted average cost of debt was
2.30% and 95% of our debt facilities are at fixed rates or hedged.
The weighted average maturity of the Group's drawn debt is 5.5
years at the current period end and the Group's LTV ratio is 27% as
at 30 April 2022.
This LTV and interest cover ratio of 10.0x for the rolling
twelve-month period ended 30 April 2022 provides us with
significant headroom compared to our banking covenants. We had
GBP198.5m of undrawn bank facilities at 30 April 2022.
Taking into account the improvements we have made in the
performance of the business and the reduction in our average cost
of debt over the last eight years, the Group is capable of
generating free cash after dividends sufficient to fund the
building of two 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.
New Financing
In April 2022, Safestore drew its existing uncommitted $115m
Shelf facility. The facility was in Euros for a 7-year term at an
interest rate of 2.45% in order to partially fund the acquisition
of Carlyle's 80% share of the Benelux JV.
FX Forward Contracts
During the first half of 2020, the Group took out average rate
FX forward contracts to hedge the majority of the Group's exposure
to the translation of Euro denominated earnings for the period
until April 2023. The remaining values are EUR8.0m for the second
half of the 2022 financial year and EUR8.5m for the first half of
the 2023 financial year. This has the effect of fixing the rate at
which Euro earnings are translated to the rate of EUR1.0751 to
GBP1, up to the value of the contract.
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
FY2021 and HY2022.
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 pandemic response in
particular 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 156,000 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 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 FY2021, the
space occupied by local charities in 226 units across 102 stores
was 18,266 sq ft and worth GBP636,945.
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 subsectors.
As a result, operational emissions intensity tends to be far lower.
According to a recent report by KPMG & EPRA, self-storage
generates the lowest greenhouse gas emissions intensity (5.75 kg/m2
for scope 1 and 2) of all European real estate sub-sectors, with
emissions per m2 less than 30% of the European listed real estate
average (19.5 kg/m2) and notably 21% of the emissions intensity of
the residential sub-sector (27.0 kg/m2). Reflecting the
considerable progress made on energy mix, efficiency measures and
waste reduction to date, Safestore's emissions intensity (3.9 kg/m2
in 2020) is considerably lower (-32%) than the self-storage
subsector average. In FY2021, the Group continued to progress with
a further 12% decline in absolute emissions despite continued
portfolio growth and greater utilisation of stores compared to
2020. Safestore's absolute (location-based) emissions are now 53%
below, and emissions intensity 65% 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 GBP3m.
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 2021 EPRA Sustainability BPR
awards. The Global ESG Benchmark for Real Assets ("GRESB") has once
again awarded Safestore an "A" rating in its 2021 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,
recognising Safestore as the third member of the FTSE 250 to
achieve this level.
Portfolio Management
Our approach to store development and acquisitions in the UK,
Paris, Spain, the Netherlands and Belgium 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 18 new stores: Chiswick,
Wandsworth, Mitcham, Paddington Marble Arch, Carshalton, Bow (all
in London), Birmingham Central, Birmingham Merry Hill, Birmingham
Middleway, Altrincham, Peterborough, Gateshead, Sheffield in the
UK, and Emerainville, Combs-la-Ville, Poissy, Pontoise and Magenta
in Paris, adding c. 960,000 sq ft of MLA.
In addition, the Group has acquired 47 existing stores through
the acquisitions of Space Maker, Alligator, Fort Box, OhMyBox! in
Spain, the buy-out of our Benelux JV and our London Heathrow and
Christchurch stores. These acquisitions added a further c.
1,870,000 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
Barking, Bedford, Chingford, Southend, Edgware, Paddington Marble
Arch and Longpont (Paris) stores adding a net c. 102,000 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 has grown significantly over the last year and now
constitutes c. 983,000 sq ft of future MLA (equivalent to c. 13% of
the existing portfolio) with an associated outstanding capital
expenditure of GBP108.0m.
Property Pipeline
Openings of New Stores and Extensions in the period
In May 2021 the Group completed the freehold acquisition of a
0.8-acre site with a 108,000 sq ft warehouse to the east of London
in a prominent position on the A12 in Bow. The building has
existing consent for storage and we only required planning consents
for some external modifications to the building. Otherwise, the
building was suitable for immediate conversion to self-storage. The
74,000 sq ft store opened in December 2021.
In May 2021, the Group exchanged contracts on a leasehold
basement car park adjacent to our existing London Paddington Marble
Arch store. The occupancy of the Paddington Marble Arch store on 31
March 2021 was 80%. The extension opened in December 2021, adding
8,500 sq ft of MLA.
In September 2020 the Group received planning permission to
extend its Southend store by 10,100 sq ft. The existing store has
an MLA of 49,400 sq ft and was 86% occupied at the end of September
2020. The extension opened in December 2021.
The Group has also received planning permission to extend its
Edgware store by a further 22,900 sq ft. The existing store has MLA
of 24,000 sq ft and reached a peak occupancy of 91% prior to
extension works commencing. The extension opened in December
2021.
Lease Extensions and Assignments
As part of our ongoing asset management programme, we have now
extended the leases on 23 stores or 64% 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.
Development Sites
UK
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 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.
In April 2021, the Group exchanged contracts on a freehold site
in Woodford in Northeast London. Subject to planning, we will open
a 56,500 sq ft MLA store in 2025.
The Group has also previously acquired two additional sites in
London at Morden and Bermondsey. Morden is a freehold 0.9-acre site
in an established industrial location. Planning permission for a
52,000 sq ft self-storage facility has now been granted and
construction on this site is underway with a view to opening in Q1
2023. 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 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 in Q4 of 2022.
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 2023.
In May 2022, the Group completed the acquisition of a 2.1-acre
freehold site including an existing warehouse in Wigan in Greater
Manchester. Subject to minor planning approvals for elevations and
signage, we plan to convert the existing building and open a c.
42,700 sq ft MLA store in the second quarter of 2023.
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 EUR1.0m 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 early
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 the third quarter of 2022.
Over the first half of 2022 we have exchanged contracts on three
freehold development sites to the west of Paris. All sites require
planning permission and newly built stores of 56,000 sq ft, 20,000
sq ft and 58,000 sq ft will be constructed over the next 18
months.
Spain
In December 2019 the Group completed the acquisition of OMB
Self-storage which operates three leasehold properties and one
freehold property, all very well located in the centre of
Barcelona. The four locations (Valencia, Calabria, Glories and
Marina) have an MLA totalling 108,000 sq ft. The occupancy of the
business at the end of April 2022 was 86.6%.
The Group is continuing its expansion of the business in
Barcelona and its entry into the Madrid market with the acquisition
of the following sites.
In April 2021, the Group exchanged contracts on a freehold
building in a high population density area in northern Madrid. The
acquisition has been completed and planning granted and we will
convert the existing building into a 54,000 sq ft MLA self-storage
facility. It is anticipated that the site will open in the fourth
quarter of the 2021/22 financial year.
In March 2021, the Group exchanged contracts on a freehold
building in Southern Madrid. The acquisition has been completed and
planning granted and we will convert the existing building into a
32,000 sq ft MLA self-storage facility. It is anticipated that the
site will open in the fourth quarter of the 2021/22 financial
year.
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
46,800 sq ft MLA self-storage facility. It is anticipated that the
site will open in the third quarter of 2023.
In January 2021, the Group exchanged contracts on a freehold
building in a densely populated area in central Barcelona. The
acquisition has been completed and planning granted and we will
convert the existing building into a 12,500 sq ft MLA self-storage
facility. It is anticipated that the site will open in the third
quarter of the 2021/22 financial year.
In August 2021, the Group exchanged contracts on a leasehold
site in central Barcelona. 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 Q4 of 2023, approximately twelve months
later than originally planned to ensure compatibility with other
developments being undertaken by the landlord on the same site.
In April 2021, the Group exchanged contracts on a freehold
building in northern Barcelona. Subject to planning, we will
convert the existing building into a 41,500 sq ft MLA self-storage
facility. It is anticipated that the site will open in the first
quarter of the 2022/23 financial year.
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 30,000 sq ft MLA
self-storage facility. Planning has been granted and we expect to
open the site in the second quarter of the 2022/23 financial
year.
The total further cost of the acquisition and construction of
the new Spanish sites is anticipated to be c. EUR22.0m and the
seven stores will add 241,500 sq ft of additional MLA. Since
originally disclosing the above developments there have been some
adjustments to the MLA which has added a further 16,700 sq ft. Cost
inflation relating to the construction of the above sites has been
included in the outstanding capital expenditure above.
Netherlands
In January 2022, the Netherlands business opened a new store in
Nijmegen. The store is freehold with an MLA of 40,000 sq ft and is
a conversion of an existing building. Nijmegen has a population of
177,000 and the site is well located on a main road with good
visibility and access.
We recently 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
will be opened in Q4 2023.
Store Extensions
In April 2021, we exchanged contracts on the acquisition of a
0.5-acre site adjacent to our existing London Wimbledon store (MLA
58,800 sq ft). We completed this transaction in December 2021 and
construction is underway. The existing reception area will be
relocated to a more prominent and visible roadside location and a
further 9,000 sq ft of storage capacity and 1,000 sq ft of offices
will be added. The Wimbledon store's peak occupancy, prior to the
Covid-19 pandemic, was 92%.
In September 2021 the Group received planning permission to
extend its Winchester store by 11,000 sq ft. The existing store has
an MLA of 42,000 sq ft and has been more than 90% occupied for the
last twelve months. It is anticipated that the extension will be
open in the fourth calendar quarter of 2022 and that there will be
minimal impact on day-to-day operations of the store during
construction which is now underway.
Property Pipeline Summary
Store FH/ Status MLA sq Target Other
LH ft Opening
London - Lea FH Completed/ planning 76,500 Q1 2025 New build.
Bridge granted GBP170k pa of
rental income
prior to opening
---- --------------------- ----------- --------- -----------------------------
London - Old FH Completed/ subject 76,500 TBC New build.
Kent Road to planning Rental income
receivable prior
to opening
---- --------------------- ----------- --------- -----------------------------
London - Woodford FH Contracts exchanged/ 65,000 Q4 2025 New build
subject to planning
---- --------------------- ----------- --------- -----------------------------
London - Morden FH Completed/ planning 52,000 Q1 2023 New build
granted
---- --------------------- ----------- --------- -----------------------------
London - Bermondsey FH Completed/ subject 50,000 Q4 2026 New build
to planning
---- --------------------- ----------- --------- -----------------------------
Shoreham FH Contracts exchanged/ 54,000 Q4 2022 New build
subject to planning
---- --------------------- ----------- --------- -----------------------------
London - Paddington LH Completed/ planning 13,000 Q3 2023 Conversion of
Park West granted basement car park-satellite
store to existing
Paddington store
---- --------------------- ----------- --------- -----------------------------
Wigan FH Completed/ subject 42,700 Q2 2023 Conversion of
to planning existing warehouse
(elevations
and signage)
---- --------------------- ----------- --------- -----------------------------
London - Wimbledon FH Completed/ planning 9,000 Q2 2022 Extension of existing
granted storage site
1,000
office
---- --------------------- ----------- --------- -----------------------------
Winchester FH Planning granted 11,000 Q4 2022 Extension of existing
site
---- --------------------- ----------- --------- -----------------------------
Paris - La Défense FH Planning granted 44,000 Q2 2025 Facility within
mixed use development
---- --------------------- ----------- --------- -----------------------------
Paris - Southern FH Planning granted 55,000 Q3 2022 New build
Paris
---- --------------------- ----------- --------- -----------------------------
Paris - West FH Contracts exchanged/ 56,000 Q4 2023 New Build
1 subject to planning
---- --------------------- ----------- --------- -----------------------------
Paris - West FH Contracts exchanged/ 20,000 Q4 2023 New Build
2 subject to planning
---- --------------------- ----------- --------- -----------------------------
Paris - West FH Contracts exchanged/ 58,000 Q3 2023 New Build
3 subject to planning
---- --------------------- ----------- --------- -----------------------------
Northern Madrid FH Completed/ planning 54,000 Q4 2022 Conversion of
granted existing building
---- --------------------- ----------- --------- -----------------------------
Southern Madrid FH Completed/ planning 32,000 Q4 2022 Conversion of
granted existing building
---- --------------------- ----------- --------- -----------------------------
Eastern Madrid FH Contracts exchanged/ 46,800 Q3 2023 Conversion of
subject to planning existing building
---- --------------------- ----------- --------- -----------------------------
Central Barcelona FH Completed/ planning 12,500 Q3 2022 Conversion of
1 granted existing building
---- --------------------- ----------- --------- -----------------------------
Central Barcelona LH Contracts exchanged/ 24,700 Q4 2023 Conversion of
2 subject to planning existing building
---- --------------------- ----------- --------- -----------------------------
Northern Barcelona FH Contracts exchanged/ 41,500 Q1 2023 Conversion of
subject to planning existing building
---- --------------------- ----------- --------- -----------------------------
South Barcelona FH Contracts exchanged/ 30,000 Q2 2023 Conversion of
planning granted existing building
---- --------------------- ----------- --------- -----------------------------
Amersfoort - FH Contracts exchanged/ 58,000 Q4 2023 New build
Netherlands subject to planning
---- --------------------- ----------- --------- -----------------------------
Total Pipeline MLA c. 983k
----------- ----------------------------------------
Total Further Capex c. GBP108m
----------- ----------------------------------------
Acquisition of remaining 80% of Carlyle JV(14)
As announced on 31 March 2022, Safestore acquired the remaining
80% of the equity owned by Carlyle Europe Realty in the Joint
Venture(14) formed in 2019 ("the Joint Venture"). The total
consideration paid to Carlyle was EUR67m. The total initial cash
outflow was EUR135.3m and included the share purchase (EUR53.6m),
debt purchase (EUR13.4m), and refinancing of the existing
borrowings (EUR68.3m) and was funded from the Group's existing loan
facilities. The Joint Venture was acquired based on an enterprise
value of EUR146m.
The Joint Venture(14) was setup in 2019 to acquire and develop
assets in the Netherlands and Belgium in order to leverage
Safestore's operating platform outside our core markets. Since
then, the Joint Venture has grown to a portfolio of 55,000 square
meters (600,000 sq ft) of MLA which is currently 74% occupied.
The portfolio is made up of 15 high quality properties (twelve
freehold properties, two ground leases and one leasehold property).
Nine properties are located in the Netherlands, six of which are
concentrated in the Haarlem / Amsterdam area with additional
properties in The Hague, Het Gooi and the recently opened Nijmegen
store. In Belgium, two stores are located in the Brussels area, two
in the city of Liege and further properties in Nivelles and
Charleroi. Safestore has managed the properties since acquisition
by the Joint Venture.
The Group's investment is expected to be marginally accretive to
Group earnings per share in FY2021/22 and will support the Group's
future dividend capacity. The expected initial yield based on total
enterprise value is 3.9% which we expect to grow to Safestore's
normal returns hurdles as the portfolio matures. Post-transaction,
the Group's LTV will increase to 31%.
Safestore and Carlyle continue to explore further opportunities
to work together.
Acquisition of Your Room Self Storage, Christchurch
In December 2021, Safestore acquired Your Room Self Storage in
Christchurch, Dorset, for an enterprise value of GBP2.45m. The
freehold Christchurch store has an MLA of 14,000 sq ft and the
Group anticipates that the initial yield in the first year will be
in excess of 6%.
The Group will rebrand the store and has taken over operation of
the site with immediate effect. The store will operate as a
satellite store to our two existing Bournemouth stores.
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 78 stores,
contributed GBP54.6m 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 four stores in
Barcelona. 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 72 58 130 29 4 15 178
Let Square Feet (m
sq ft) 2.364 2.185 4.549 1.098 0.094 0.445 6.186
Maximum Lettable
Area (m sq ft) 2.900 2.700 5.600 1.360 0.110 0.600 7.670
Average Let Square
Feet per store (k
sq ft) 33 38 35 38 24 30 35
Average Store Capacity
(k sq ft) 40 47 43 47 28 40 43
Closing Occupancy
% 81.7% 80.8% 81.3% 80.6% 86.6% 74.2% 80.7%
Average Rate (GBP
per sq ft) 34.32 22.30 28.53 33.94 28.65 16.12 29.38
Revenue (GBP'm) 48.9 30.0 78.9 20.0 1.4 0.7 101.0
Average Revenue per
Store (GBP'm) 0.68 0.52 0.61 0.69 0.35 0.05 0.57
The reported totals have not been adjusted for the impact of rounding
* Represents results for the month of April 2022
We have a strong position in both the UK and Paris markets
operating 130 stores in the UK, 72 of which are in London and the
South East, and 29 stores in Paris.
In the UK, 62% 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 49 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.
Together, as at 30 April 2022 London, the South East and Paris
represent 57% of our stores, 68% of our revenues, as well as 54% of
our available capacity.
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 represents a platform into
the Spanish market where we hope to take advantage of development
and acquisition opportunities and have recently announced the
acquisition of seven development sites in Barcelona and Madrid. In
addition, in March 2022, the Group acquired the 80% of the equity
in the Benelux Joint Venture previously owned by Carlyle and, as a
result, now own fifteen stores in the Netherlands and Belgium. Our
in-house development resource in the Benelux region is working on
the establishment of a pipeline of new stores in this region.
Market
The Self Storage Association ("SSA") noted in its May 2022
report, that, "despite two record years, inflationary pressures,
escalating costs of construction and a war in Europe, operators
remain optimistic about the future....". Previous downturns have
presented opportunities for self-storage and the pandemic seems to
have once again demonstrated the resilience of the self-storage
industry and the broad range of demand drivers.
The self-storage market in the UK, France, Spain and Benelux
remains relatively immature compared to geographies such as the USA
and Australia. The SSA Annual Survey (May 2022) confirmed that
self-storage capacity stands at 0.76 sq ft per head of population
in the UK. The most recent report relating to Europe (FEDESSA's
2021 report) showed that capacity in France is 0.22 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 0.38 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. 1,400 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 545 stores. In the Netherlands penetration is 0.58
sq ft per head of population (340 stores) and in Belgium 0.19 sq ft
per head of population (97 stores).
Our interpretation of the most recent 2022 SSA report is that
similar levels of capacity are likely to be developed in 2022 and
2023 at around 30-40 stores per annum. We do not consider this
level of new supply growth to be of concern.
The 30-40 comparable sites represent between 2% and 3% of the
traditional self-storage industry in the UK. These figures
represent gross openings and do not take into account 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 the last four 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
2022 report the SSA estimates that 2,050 self-storage facilities
exist in the UK market including around 621 container-based
operations. According to the 2022 survey, Safestore is the industry
leader by number of stores with 130 wholly owned sites followed by
Big Yellow with 105 stores (including Armadillo), Access with 60
stores, Shurgard with 40 stores, Lok'n Store with 39 stores,
Storage King with 37 stores and Ready Steady Store with 27 stores.
In aggregate, the top seven leading operators account for almost
21% of the UK store portfolio. The remaining c. 1,613 self-storage
outlets (including 621 container-based operations) are
independently owned in small chains or single units. In total there
are 1,015 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 operates in Barcelona and has recently
announced its future expansion into 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 is increasing but remains
relatively low, providing an opportunity for future industry
growth. The SSA survey consistently indicates that approximately
half of consumers either knew nothing about the service offered by
self-storage operators or had not heard of self-storage at all.
Since 2016, this statistic has only fallen 10ppts from 59%.
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. 64% of respondents were
unable to name a self-storage business in their local area (56% in
2021). 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 73% of those
surveyed (77% in 2021) 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. 26% of respondents (c. 25% in 2021).
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) 76% 82% 88% 84%
Square feet occupied
(% of total) 57% 65% 82% 76%
Average Length of Stay
(months) 18.7 29.4 23.4 27.8
Business Customers
Numbers (% of total) 24% 18% 12% 16%
Square feet occupied
(% of total) 43% 35% 18% 24%
Average Length of Stay
(months) 27.2 31.7 28.0 28.6
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 85% of customers travelling for
less than 30 minutes to their storage facility (2022 SSA Survey)
Safestore's national store footprint represents a competitive
advantage.
The Group's capital-efficient portfolio of 178 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 2022
of 11.3 years (FY2021: 11.8 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
four stores in Barcelona. 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.
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 90% (2021: 89%) of our enquiries in the UK and 85%
(2021: 83%) in France. Telephone enquiries comprise 7% of the total
(9% in France) and 'walk-ins' amount to only 4% (5% 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 56% 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 HY2022, achieved a 'TrustScore' of 4.6 out of 5. In
Spain, OMB collects customer feedback via Google reviews and has
maintained a score of 4.7 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 43% of our total space
let and have an average length of stay of 27 months. Within our
business customer category, our National Accounts business
represents around 624,000 sq ft of occupied space (around 14% 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 28 months and
22 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.
Since the completion of the rebalancing of our capital structure
in early 2014, the subsequent amendment and extension of our
banking facilities in summer 2015, the refinancing of all
facilities in May 2017 and the issuances of a further GBP125m of US
Private Placement Notes in 2019, GBP150m in 2021 and GBP89m in
2022, 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 2022 we had 1.0m sq ft of unoccupied space in the
UK, 0.3m sq ft in France and 0.2m in Spain and Benelux, equivalent
to c. 37 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 2022 2021 Change
-------------------------------- ------ ------ ---------
Revenue (GBP'm) 78.9 67.2 17.4%
EBITDA (GBP'm)(3) 50.1 39.8 25.9%
EBITDA (after leasehold costs)
(GBP'm) 46.3 35.8 29.3%
Closing Occupancy (let sq ft-
million)(4) 4.549 4.466 1.9%
Closing Occupancy (% of MLA) 81.3% 81.0% +0.3ppts
Maximum Lettable Area (MLA)(5) 5.600 5.510 1.6%
Average Storage Rate (GBP)(6) 28.53 24.66 15.7%
UK Operating Performance- like-for-like(9) 2022 2021 Change
-------------------------------------------- ------ ------ ---------
Storage Revenue (GBP'm) 63.8 53.3 19.7%
Ancillary Revenue (GBP'm) 14.0 13.3 5.3%
Revenue (GBP'm) 77.8 66.6 16.8%
EBITDA (GBP'm)(3) 49.4 39.4 25.4%
Closing Occupancy (let sq ft-
million)(4) 4.475 4.427 1.1%
Closing Occupancy (% of MLA) 82.1% 81.8% +0.3ppts
Average Occupancy (let sq ft-
million)(4) 4.486 4.348 3.2%
Average Storage Rate (GBP)(6) 28.67 24.73 15.9%
The UK business had a strong first half of the year with revenue
up 17.4% for the six months. Like-for-like storage revenue was up
19.7% with ancillary revenues up 5.3% compared to 2021. As a
result, total like-for-like revenue was up 16.8% for the
period.
The strong UK result was driven by an excellent like-for-like
average rate performance which was up 15.9% compared to the first
half of 2021. The like-for-like average rate also grew sequentially
in the second quarter of the period by 0.9% compared to the first
quarter. Like-for-like average occupancy grew by 3.2% compared to
2021 and the like-for-like closing occupancy at the end of April
2022 was up 0.3ppts at 82.1% (2021: 81.8%). It should be noted that
the like-for-like closing occupancy was impacted by the addition of
40,000 sq ft of additional MLA arising from the opening of recent
store extensions at London Edgware, Southend and London Paddington
Marble Arch which had the impact of diluting the closing occupancy
by 0.7ppts.
Total revenue growth of 17.4% reflected the strong like-for-like
performance, the 2021 store opening in Birmingham Middleway offset
by the closure of Birmingham Digbeth, the December 2021 acquisition
of Christchurch and the December 2021 opening of our London Bow
store. 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 5.1% in total or 4.4% on a
like-for-like basis.
As a result, underlying EBITDA after leasehold costs for the UK
business was GBP46.3m (2021: GBP35.8m), an increase of GBP10.5m or
29.3%. Total EBITDA margins at store level increased by 3.2ppts to
70.8% and after administrative costs EBITDA margins grew by 4.3ppts
to 63.5%.
Paris Trading Performance
Paris Operating Performance 2022 2021 Change
-------------------------------- ------ ------ ---------
Revenue (EUR'm) 23.8 22.1 7.7%
EBITDA (EUR'm)(3) 16.3 15.4 5.8%
EBITDA (after leasehold costs)
(EUR'm) 13.3 12.7 4.7%
Closing Occupancy (let sq ft-
million)(4) 1.098 1.072 2.4%
Closing Occupancy (% of MLA) 80.6% 81.7% -1.1ppts
Maximum Lettable Area (MLA)(5) 1.360 1.360 -%
Average Storage Rate (EUR)(6) 40.38 38.67 4.4%
Revenue (GBP'm) 20.0 19.5 2.6%
Paris Operating Performance-
like-for-like(9) 2022 2021 Change
------------------------------- ------ ------ ---------
Storage Revenue (EUR'm) 21.7 20.2 7.4%
Ancillary Revenue (EUR'm) 2.0 1.9 5.3%
Revenue (EUR'm) 23.7 22.1 7.2%
EBITDA (EUR'm)(3) 16.5 15.4 7.1%
Closing Occupancy (let sq ft-
million)(4) 1.087 1.072 1.4%
Closing Occupancy (% of MLA) 82.9% 81.7% +1.2ppts
Average Occupancy (let sq ft-
million)(4) 1.080 1.052 2.7%
Average Storage Rate (EUR)(6) 40.44 38.67 4.6%
Revenue (GBP'm) 19.9 19.5 2.1%
Paris had a strong period, growing like-for-like revenue by 7.2%
compared to last year.
The like-for-like average storage rate was up 4.6% for the
period whilst like-for-like average occupancy was up 2.7%.
Like-for-like closing occupancy was at 82.9%, up 1.2ppts compared
to 2021. Ancillary revenues were robust, growing by 5.3% compared
to 2021 resulting in like-for-like average revenue growing by
7.2%.
Sterling equivalent revenue was up 2.1% reflecting a 4.8%
strengthening in the average Sterling to Euro exchange rate over
the comparative period.
The like-for-like cost base in Paris was up 7.5% compared to the
prior year which benefited from the profit on the sale of a surplus
piece of land. Excluding the impact of this sale, the cost base
grew by 4.3%.
As a result, like-for-like EBITDA grew to EUR16.5m (2021:
EUR15.4m), an improvement of EUR1.1m or 7.1% on 2021.
Like-for-like EBITDA margins at store level increased by 0.3ppts
to 75.9% and after administrative costs (and including the impact
of the aforementioned land sale) EBITDA margin decreased by 0.1ppts
to 69.6%
The difference between like-for-like and total figures for Paris
is the opening of the Paris Magenta store in late April 2021. As
this store is still in the early stages of trading it is not
contributing to EBITDA but does increase the MLA and hence dilutes
the closing occupancy.
Spain Trading Performance
Spain Operating Performance-
total and like-for-like(9) 2022 2021 Change
-------------------------------- ------ ------ ---------
Storage Revenue (EUR'm) 1.57 1.49 5.4%
Ancillary Revenue (EUR'm) 0.16 0.08 100.0%
Revenue (EUR'm) 1.73 1.57 10.2%
EBITDA (EUR'm)(3) 1.01 0.96 5.2%
EBITDA (after leasehold costs)
(EUR'm) 0.76 0.71 7.0%
Closing Occupancy (let sq ft-
million)(4) 0.094 0.097 -3.1%
Closing Occupancy (% of MLA) 86.6% 89.4% -2.8ppts
Maximum Lettable Area (MLA)(5) 0.110 0.110 -
Average Storage Rate (EUR)(6) 34.09 31.61 7.8%
Revenue (GBP'm) 1.45 1.38 5.1%
Our Spanish business, which was acquired in December 2019,
contributed EUR1.7m of revenue in the period, up 10.2% compared to
the prior year. The strategy of improving average rate and
ancillary sales whilst sacrificing a small amount of occupancy is
working. Closing occupancy was down 2.8ppts at 86.6% (2021: 89.4%)
whilst average rate for the six months grew by 7.8% to EUR34.09
(2021: EUR31.61) with ancillary revenues improving strongly.
The above revenue performance, combined with a modest investment
in central headcount and increased utilities charges resulted in
the business contributing EUR0.76m of EBITDA after leasehold
costs.
Benelux Trading Performance
Our Netherlands and Belgium businesses were acquired on 30 March
2022 and therefore only contributed one month's revenue (EUR0.8m)
in the period.
Our Netherlands business ended the period with a closing
occupancy of 72.5% whilst our Belgian business had a 77.2%
occupancy.
Frederic Vecchioli
20 June 2022
Financial Review
Underlying Income Statement
The table below sets out the Group's underlying results of
operations for the six months ended 30 April 2022 and the six
months ended 30 April 2021.
H1 2022 H1 2021 Mvmt
GBP'm GBP'm %
Revenue 101.0 88.1 14.6%
Underlying costs (36.0) (34.0) 5.9%
Share of associate's underlying
EBITDA 0.2 0.3 (33.3%)
-------- --------
Underlying EBITDA 65.2 54.4 19.9%
Leasehold rent (6.5) (6.5) 0.0%
-------- --------
Underlying EBITDA after leasehold
rent 58.7 47.9 22.5%
Depreciation (0.5) (0.5) 0.0%
Finance charges (5.9) (4.8) 22.9%
Share of associate's finance
charges (0.5) (0.2) 150.0%
-------- --------
Underlying profit before tax 51.8 42.4 22.2%
Current tax (2.6) (2.8) (7.1%)
Share of associate's tax - (0.1) (100.0%)
Adjusted EPRA earnings 49.2 39.5 24.6%
Share-based payments charge (6.0) (5.9) 1.7%
EPRA basic earnings 43.2 33.6 28.6%
======== ========
Average shares in issue (m) 210.8 210.8
Diluted shares (for ADE EPS)
(m) 218.6 218.4
Adjusted diluted EPRA EPS (pro
forma) (p) 22.5 18.1 24.3%
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 2022 H1 2021
GBP'm GBP'm
Statutory profit before tax 285.2 167.3
Adjusted for
- gain on investment properties
and investment properties under
construction (227.9) (131.3)
- change in fair value of derivatives (0.8) (1.6)
- net exchange loss 0.3 0.1
- share of associate's tax - 0.1
- share-based payments 6.0 5.9
- exceptional items - 1.9
- other exceptional gains (10.5) -
- exceptional finance income (0.5) -
Underlying profit before tax 51.8 42.4
======== ========
Management considers the above presentation of earnings to be
representative of the underlying performance of the business.
Underlying EBITDA increased by 19.9% to GBP65.2m (H1 2021:
GBP54.4m) reflecting a 14.6% increase in revenue offset by a 5.9%
increase in the underlying cost base (see below).
Finance charges increased from GBP4.8m in H1 2021 to GBP5.9m in
H1 2022. This principally reflects the increased borrowing
associated with the new USPP's. In 2021, Safestore extended its
borrowing facilities with the issuance of the equivalent of GBP149m
new sterling and euro denominated US Private Placement (USPP)
notes. These funds were used initially to pay down Revolving Credit
Facilities (RCF) thereby providing further capacity for medium term
growth.
As a result, we achieved a 22.2% increase in underlying profit
before tax of GBP51.8m (H1 2021: GBP42.4m). The main additional
factor in the increase in statutory profit before tax in the year
is the GBP227.9m increase in the gain on investment and development
property, primarily due to the stronger underlying performance of
the stores, as well as a slight reduction in exit cap rates.
Included within statutory profit before tax are other
exceptional gains of GBP10.5m. GBP5.5m relates to the profit made
on the deemed disposal of Safestore's 20% investment in the Joint
Venture formed in 2019 with Carlyle Europe Realty 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.
The exceptional finance income relates to the profit made on the
termination of interest rate swaps associated with the Joint
Venture.
The share-based payments charge increased slightly as the 2017
LTIP scheme nears the vesting date with a reduced probability of
lapses and forfeiture by the option holders.
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 decreased by 7.1% to GBP2.6m (H1 2021:
GBP2.8m).
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 24.3%
to 22.5 pence (H1 2021: 18.1 pence).
Reconciliation of Underlying EBITDA
The table below reconciles the operating profit included in the
consolidated income statement to underlying EBITDA.
H1 2022 H1 2021
GBP'm GBP'm
Statutory operating profit 292.6 173.2
Adjusted for
- gain on investment properties (223.9) (127.7)
- share of associate's
underlying EBITDA 0.5 0.3
- depreciation 0.5 0.5
- variable lease payments - 0.3
- share-based payments 6.0 5.9
Exceptional
items
- costs incurred relating to corporate
transactions and exceptional taxation
costs - 1.9
Other exceptional gains
- net gain on deemed disposal
of investment in associate (5.5) -
- profit on sale of land (5.0) -
Underlying EBITDA 65.2 54.4
======== ========
The main reconciling items between statutory operating profit
and Underlying EBITDA are the gain on investment properties as well
as adjustments for other exceptional gains, as mentioned above. The
gain on investment properties was GBP223.9m in H1 2022 (H1 2021:
GBP127.7m) represented by gain on investment properties and
investment properties under construction of GBP227.9m and fair
value re-measurement of lease liabilities add-back (GBP4.0m). The
Group's approach to the valuation of its investment property
portfolio at 30 April 2022 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 2022 H1 2021
Total Total
UK Paris Spain Benelux (CER) UK Paris Spain (CER)
GBP'm EUR'm EUR'm EUR'm GBP'm GBP'm EUR'm EUR'm GBP'm
Revenue 78.9 23.8 1.7 0.8 102.1 67.2 22.1 1.6 88.1
Underlying
cost of sales (23.0) (5.9) (0.4) (0.3) (29.0) (21.8) (5.4) (0.3) (26.9)
------- ------ ------ -------- ------- ------- ------ ------ -------
Store EBITDA 55.9 17.9 1.3 0.5 73.1 45.4 16.7 1.3 61.2
Store EBITDA
margin 70.8% 75.2% 76.5% 62.5% 71.6% 67.6% 75.6% 81.3% 69.5%
Underlying
administrative
expenses (5.8) (1.6) (0.2) (0.1) (7.4) (5.6) (1.3) (0.3) (7.1)
Underlying
EBITDA 50.1 16.3 1.1 0.4 65.7 39.8 15.4 1.0 54.1
EBITDA margin 63.5% 68.5% 64.7% 50.0% 64.3% 59.2% 69.7% 62.5% 61.4%
Leasehold rent (3.8) (3.0) (0.3) (0.0) (6.6) (4.0) (2.7) (0.2) (6.5)
Underlying
EBITDA after
leasehold rent 46.3 13.3 0.8 0.4 59.1 35.8 12.7 0.8 47.6
======= ====== ====== ======== ======= ======= ====== ====== =======
EBITDA after
leasehold rent
margin 58.7% 55.9% 47.1% 50.0% 57.9% 53.3% 57.5% 50.0% 54.0%
UK Paris Spain Benelux Total UK Paris Spain Total
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Underlying EBITDA
after leasehold
rent (CER) 46.3 11.8 0.7 0.3 59.1 35.8 11.2 0.6 47.6
Adjustment to
actual exchange
rate - (0.5) (0.1) - (0.6) - - - -
Reported underlying
EBITDA after
leasehold rent 46.3 11.3 0.6 0.3 58.5 35.8 11.2 0.6 47.6
======= ====== ====== ======== ======= ======= ====== ====== =======
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 GBP10.3m, or 25.9%, to
GBP50.1m (H1 2021: GBP39.8m), reflecting a 17.4% increase in
revenue, arising from a 15.7% increase in average rate coupled with
an increase in average occupancy of 3.8%, partially offset by a
5.1% increase in the underlying cost base. The UK also reflected
strong like-for-like revenue growth of 16.8% in addition to the
acquisition of Christchurch and the opening of Bow. The underlying
UK EBITDA margin increased to 63.5% compared to 59.2% in H1
2021.
In Paris, underlying EBITDA increased by EUR0.9m, or 5.8%, to
EUR16.3m (H1 2021: EUR15.4m), reflecting a EUR1.7m increase in
revenue, arising from a 4.4% increase in the average storage rate
coupled with a 3.4% increase in average occupancy. The EBITDA after
leasehold costs margin in Paris decreased slightly from 57.5% in H1
2021 to 55.9% in H1 2022, reflecting the underlying cost base of
the developing sites. Underlying EBITDA after leasehold rent in
Paris increased by 4.7% to EUR13.3m (H1 2021: EUR12.7m).
In Spain, underlying EBITDA increased by EUR0.1m, or 10.0%, to
EUR1.1m, reflecting an increase in revenue, arising from a 7.8%
increase in average storage rate, offset by a decrease in average
occupancy of 2.5%.
On the 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 month of April for Benelux was
EUR0.8m.
The combined performance of the UK, Paris, Spain, Netherlands
and Belgium resulted in a 24.2% increase in underlying EBITDA after
leasehold rent at constant exchange rates. Adjusting for an
unfavourable exchange rate movement of 4.8% resulting in an impact
of GBP0.6m in the current year and share of associate's underlying
EBITDA of GBP0.2m (H1 2021: GBP0.3m), Group reported underlying
EBITDA after leasehold rent has increased by 22.5% or GBP10.8m to
GBP58.7m (H1 2021: GBP47.9m).
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 2021 and H1 2022.
% of % of
H1 2022 total H1 2021 total % change
UK GBP'm 78.9 78% 67.2 76% 17.4%
Paris
Local currency EUR'm 23.8 22.1 7.7%
Paris in Sterling GBP'm 20.0 20% 19.5 22% 2.6%
Spain
Local currency EUR'm 1.7 1.6 6.2%
Spain in Sterling GBP'm 1.4 1% 1.4 2% 0.0%
Benelux
Local currency EUR'm 0.8 -
Benelux in Sterling GBP'm 0.7 1% -
Average exchange
rate EUR:GBP 1.190 1.135 (4.8%)
Total revenue 101.0 100% 88.1 100% 14.6%
======== ======= ======== ======= =========
The Group's reported revenue increased by 14.6% or GBP12.9m
during the period. The Group's occupied space was 551,000 sq ft
higher at 30 April 2022 (6.186 million sq ft) than at 30 April 2021
(5.635 million sq ft). Average occupancy during the period was 4.9%
higher at 5.80 million sq ft (H1 2021: 5.53 million sq ft), and the
reported average rental rate for the Group increased to GBP29.38
(H1 2021 GBP26.51).
On a like-for-like basis, adjusting for the impact of new
stores, the Group's revenue has increased by 13.3% since H1 2021.
Adjusting for an unfavourable exchange impact in the current year,
revenue increased by 14.5% on a constant currency and like-for-like
basis.
In the UK, reported revenue increased by GBP11.7m or 17.4%. This
was driven by the average rental rate increasing by 15.7% to
GBP28.53 (H1 2021: GBP24.66) coupled with a closing occupancy
increase of 1.9% to 4.55 million sq ft at 30 April 2022 (H1 2021:
4.47 million sq ft). The average space occupied during the period
was up 3.8% compared with H1 2021 at 4.55 million sq ft (H1 2021:
4.38 million sq ft).
On a like-for-like basis, adjusting for new stores, UK revenue
increased by GBP11.2m or 16.8% arising from a 15.9% increase in the
average store rate and a 3.2% increase in average occupancy.
In Paris, revenue increased by EUR1.7m or 7.7%. The average Euro
exchange rate for H1 2022 was EUR1.190:GBP1 compared with
EUR1.135:GBP1 in H1 2021 resulting in a negative impact on revenue
of GBP1.0m and revenue in constant currency increased by GBP1.5m to
GBP21.0m (H1 2021: GBP19.5m).
Paris closing occupancy at 30 April 2022 has increased by 2.4%
compared to 30 April 2021 to 1.10 million sq ft and average
occupancy for the period of 1.09 million sq ft is a 3.4% increase
compared to H1 2021. The average rental rate in Paris was EUR40.38
for the period, an increase of 4.4% on H1 2021, EUR38.67.
For Spain, revenue was EUR1.7m with a closing occupancy 0.094
million sq ft (H1 2021: 0.097 million sq ft), or 86.6% (H1 2021:
89.4%).
The recent buy-out of the remaining 80% owned by Carlyle Europe
Realty in the Joint Venture formed in 2019 included contributions
in Benelux of EUR0.8m of revenue for the month of April, with
occupancy of 74.2% and an average rental rate of EUR19.18.
Analysis of Cost Base
Cost of sales
The table below details the key movements in cost of sales
between H1 2021 and H1 2022.
Cost of sales H1 2022 H1 2021
GBP'm GBP'm
Reported cost
of sales (29.1) (27.7)
Adjusted for:
Depreciation 0.5 0.5
Variable lease payments - 0.3
Underlying cost of
sales (28.6) (26.9)
======== ========
Underlying cost of sales
for H1 2021 (26.9)
New developments cost of
sales 0.2
Underlying cost of sales for H1
2021 (Like-for-like) (26.7)
Employee remuneration and
volume related (0.1)
Employee recruitment and
training (0.1)
Utilities and facilities (1.1)
Underlying cost of sales for H1
2022 (Like-for-like; CER) (28.0)
New developments cost of
sales (1.0)
Underlying cost of sales
for H1 2022 (CER) (29.0)
Foreign exchange 0.4
Underlying cost of sales
for H1 2022 (28.6)
========
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 4.9% or GBP1.3m, to
GBP28.0m (H1 2021: GBP26.7m), principally due to increased
facilities and utilities costs.
The cost of sales attributable to new and acquired sites at Bow,
Birmingham Middleway and Christchurch in the UK and Magenta in
Paris and in the consolidated results for the month of April in the
Netherlands and Belgium is GBP1.0m in H1 2022.
Administrative Expenses
The table below reconciles reported administrative expenses to
underlying administrative expenses and details the key movements in
underlying administrative expenses between H1 2021 and H1 2022.
Administrative expenses H1 2022 H1 2021
GBP'm GBP'm
Reported administrative
expenses (13.4) (14.9)
Adjusted for:
Share-based payments 6.0 5.9
Exceptional items - 1.9
Underlying administrative
expenses (7.4) (7.1)
======== ========
Underlying administrative expenses
for H1 2021 (7.1)
New development administrative
expenses -
Underlying administrative expenses for
H1 2021 (Like-for-like) (7.1)
Employee related and
travel costs (0.6)
Professional fees and administration
costs 0.5
Underlying administrative expenses for
H1 2022 (Like-for-like; CER) (7.2)
New development administrative
expenses (0.2)
Underlying administrative expenses
for H1 2022 (CER) (7.4)
Foreign exchange -
Underlying administrative expenses
for H1 2022 (7.4)
========
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 increased by 4.2% or GBP0.3m
to GBP7.4m (H1 2021: GBP7.1m). The increase arose predominantly
from employee related costs (GBP0.6m) and new stores and
developments (GBP0.2m), offset by savings in professional fees and
administration costs (GBP0.5m).
Exceptional items
In France, the basis on which property taxes have been assessed
has been challenged by the tax authority for financial years 2011
onwards. In March 2021 the French Court of Appeal delivered a
judgement, which resulted in a partial success for the Group;
however, a further appeal has been lodged with the French Supreme
Court against those decisions on which the Group was unsuccessful.
A provision is included in the consolidated financial accounts of
GBP2.2m at 30 April 2022 (31 October 2021: GBP2.1m), to reflect the
increased uncertainty surrounding the likelihood of a successful
outcome. Of the total provided, GBP0.1m has been charged in
relation to 6 months to 30 April 2022 (30 April 2021: GBP0.1m)
within cost of sales (underlying EBITDA).
It is possible that the French tax authority may appeal the
decisions of the French Court of Appeal on which the Group was
successful to the French Supreme Court. The maximum potential
exposure in relation to these issues at 30 April 2022 is GBP2.8m
(31 October 2021: GBP2.7m). No provision for any further potential
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.
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 2022, a sample of the Group's largest properties,
representing approximately 39% of the value of the Group's
investment property portfolio at 31 October 2021, 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 61% of the
Group's investment property portfolio, updating 31 October 2021
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 2022 H1 2021
GBP'm GBP'm
Revaluation of investment
properties 229.8 129.8
Revaluation of investment properties
under construction (1.9) 1.5
Fair value re-measurement
of lease liabilities add
back (4.0) (3.6)
Gain on investment
properties 223.9 127.7
======== ========
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 GBP185.0m of the GBP227.9m net revaluation gain
(including investment properties under construction), with a
GBP42.3m revaluation gain arising in Paris and a GBP0.6m
revaluation gain arising in Spain. The valuation gain has primarily
arisen due to improving trading cash flow forecasts coupled with a
slight reduction in exit cap rates resulting from strong demand for
self-storage suitable real estate.
Operating profit
Reported operating profit increased by GBP119.4m from GBP173.2m
in H1 2021 to GBP292.6m in H1 2022, primarily reflecting a GBP96.2m
higher investment property gain as well as an GBP10.8m 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 GBP1.5m
to GBP7.4m in H1 2022 (H1 2021: GBP5.9m). The main driver of the
increase was interest payable reflecting the Group's additional
borrowings to fund the Group's acquisition and development
activity.
H1 2022 H1 2021
GBP'm GBP'm
Interest from loan
to associates 0.1 0.1
Financial instruments
income - 0.1
Other interest received 0.1 -
-------- --------
Underlying finance
income 0.2 0.2
Exceptional finance
income 0.5 -
-------- --------
Total finance income 0.7 0.2
Net bank interest payable (5.8) (4.8)
Amortisation of debt issuance costs
on bank loans (0.3) (0.2)
-------- --------
Underlying finance costs (6.1) (5.0)
Interest on obligations under
lease liabilities (2.5) (2.6)
Fair value movement on derivatives 0.8 1.6
Net exchange losses (0.3) (0.1)
-------- --------
Total finance
costs (8.1) (6.1)
Net finance
costs (7.4) (5.9)
======== ========
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 GBP1.1m to
GBP6.1m (H1 2021: GBP5.0m), principally reflecting the Group's
additional borrowings in the year drawn to fund the Group's
acquisition and development activity. 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.
Based on the drawn debt position as at 30 April 2022, 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 GBP250.0 GBP85.0 GBP55.0 65% 1.25% 0.82% 0.69% 2.02%
UK Revolver- non-utilisation GBP165.0 - - - 0.50% - - 0.50%
Euro Revolver EUR70.0 GBP25.2 GBP25.2 100% 1.25% 0.17% (0.57%) 1.42%
Euro Revolver-
non-utilisation EUR40.0 - - - 0.50% - - 0.50%
US Private Placement
2024 EUR50.9 GBP42.7 GBP42.7 100% 1.59% - - 1.59%
US Private Placement
2026 EUR70.0 GBP58.7 GBP58.7 100% 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 GBP62.1 GBP62.1 100% 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 GBP24.3 GBP24.3 100% 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 GBP88.1 GBP88.1 100% 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 GBP24.3 GBP24.3 100% 1.42% - - 1.42%
Unamortised finance
costs - (GBP1.6) - - - - - -
Total GBP824.4 GBP624.3 GBP595.9 95% 2.30%
========== ========= ========= ======= ======
As at 30 April 2022, GBP85.0m of the GBP250.0m UK revolver and
EUR30.0m (GBP25.2m) of the EUR70.0m Euro revolver were drawn. The
drawn amounts attract a bank margin of 1.25%, and the Group pays a
non-utilisation fee of 0.50% on the undrawn balances of GBP165.0m
and EUR40.0m respectively.
The Group has interest rate hedge agreements in place to June
2023, swapping SONIA on GBP55.0m at a weighted average effective
rate of 0.82% and to June 2022, swapping EURIBOR on EUR30.0m at an
effective rate of 0.17%. These interest rate swaps are in place to
hedge the UK Revolver floating SONIA rate and the Euro Revolver
floating EURIBOR rate.
On 21 April 2022, Safestore extended its borrowing facilities
with the issuance of EUR105.0m denominated US Private Placement
(USPP) Notes with the following coupon and tenor:
- EUR105.0m 7 year notes at a coupon of 2.45% (credit spread of 120 bps)
The funds were received in April 2022 and were used to pay down
Revolving Credit Facilities (RCF) utilised to acquire the remaining
80% owned by Carlyle Europe Realty (CER) in the Joint Venture
formed in 2019. The Joint Venture was setup in 2019 to acquire and
develop assets in The Netherlands and Belgium in order to leverage
Safestore's operating platform outside our core markets. Since
then, the Joint Venture has grown to a portfolio of 55,000 square
metres (600,000 sq ft) of MLA which is currently 74.2%
occupied.
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 and Spain
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 95% of the Group's drawn debt is at fixed rates
of interest. Overall, the Group has an effective interest rate on
its borrowings of 2.30% at 30 April 2022, compared to 2.36% at the
previous year end.
Non-underlying finance charge
Interest on finance leases was GBP2.5m (H1 2021: GBP2.6m) 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 remained constant at
GBP6.5m in H1 2022 (H1 2021: GBP6.5m). A net gain of GBP0.8m was
recognised on fair valuation of derivatives (H1 2021: net gain of
GBP1.6m).
The Group undertakes net investment hedge accounting for its
Euro denominated loan notes.
Tax
The tax credit for the period is analysed below:
Tax charge H1 2022 H1 2021
GBP'm GBP'm
Underlying current
tax 2.6 2.8
Current year - exceptional 0.9 -
Prior year - exceptional - (0.5)
-------- --------
Current tax charge 3.5 2.3
-------- --------
Tax on investment properties
movement 11.7 6.7
Deferred tax charge 11.7 6.7
-------- --------
Net tax charge 15.2 9.0
======== ========
Income tax in the period was a net charge of GBP15.2m (H1 2021:
GBP9.0m).
In the UK, the Group is a REIT, so the current tax charge
relates to the Paris and Spain businesses. The underlying current
tax charge for the period amounted to GBP2.6m (H1 2021:
GBP2.8m).
Profit after tax
The profit after tax for the period was GBP270.0m, compared with
GBP158.3m in H1 2021, an increase of GBP111.7m which arose
principally due to the increased gain on investment properties,
which is explained above.
Basic EPS was 128.1 pence (H1 2021: 75.1 pence) and diluted EPS
was 124.5 pence (H1 2021: 74.4 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 9.4 pence per
share, representing a 25.3% increase from the interim dividend paid
last year of 7.5 pence. This will amount to a dividend payment of
GBP19.8m (H1 2021: GBP15.8m). The dividend will be paid on 11
August 2022 to shareholders who are on the Company's register at
the close of business on 8 July 2022. The ex-dividend date will be
7 July 2022. 25% (H1 2021: 100%) 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 39% 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 61% 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
2021 1,416.2 440.4 25.2 - 1,881.8 521.6 29.8 -
Currency translation
movement - (3.1) (0.4) (1.3) (4.8)
Additions 11.9 3.4 0.1 0.3 15.7 4.0 0.1 0.3
Acquisition of
subsidiaries 2.6 - - 129.5 132.1 - - 153.0
Reclassifications 16.5 - - - 16.5 - - -
Revaluation 186.9 42.3 0.6 - 229.8 50.4 0.6 -
Value at 30 April
2022 1,634.1 483.0 25.5 128.5 2,271.1 576.0 30.5 153.3
======== ====== ====== ======== ======== ====== ====== ========
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 2022 was EUR1.19:GBP1 compared to
EUR1.18:GBP1 at 31 October 2021. This movement in the foreign
exchange rate has resulted in a GBP4.8m negative currency
translation movement in the period. This affects net asset value
("NAV") but has no impact on the loan to value ("LTV") covenant as
the assets in Paris and Spain are tested in Euro.
The Group's property portfolio valuation excluding investment
properties under construction has increased by GBP389.3m from the
valuation of GBP1,881.8m at 31 October 2021. This reflects the gain
on valuation of GBP229.8m, which is explained above, plus GBP132.1m
relating to the acquisition of the remaining 80% in the Joint
Venture and the UK Christchurch store as well as GBP32.2m relating
to additions, store refurbishments and reclassifications offset by
GBP4.8m of adverse foreign exchange movements on the translation of
the European portfolios.
The EPRA basic NTA per share, as reconciled to IFRS net assets
per share in financial statements, was 816 pence at 30 April 2022,
up 17.1% since 31 October 2021, and the IFRS reported NAV per share
was 763 pence (FY2021: 652 pence), reflecting a GBP233.8m increase
in reported net assets since 31 October 2021.
Gearing and Capital Structure
As at 30 April 2022, the Group's borrowings comprised bank
borrowing facilities, made up of a UK term loan and revolving
facilities in the UK and France, as well as US Private
Placements.
Net debt (including finance leases and cash) stood at GBP660.3m
at 30 April 2022, an increase of GBP136.5m during the period, from
GBP523.8m at 31 October 2021, principally due to increased funding
required for the acquisition of the remaining 80% owned by Carlyle
Europe Realty in the Joint Venture formed in 2019. Total capital
(net debt plus equity) increased from GBP1,898.7m at 31 October
2021 to GBP2,269.0m at 30 April 2022. The net impact is that the
gearing ratio has increased to 29.1% at 30 April 2022 from 27.6% at
31 October 2021.
Management also measures gearing with reference to its loan to
value ("LTV") ratio defined as gross debt (excluding lease
liabilities) as a proportion of the valuation of investment
properties and investment properties under construction (excluding
finance leases). At 30 April 2022, the Group LTV ratio was 27%
compared with 25% at 31 October 2021. 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 2022, GBP85.0m of the GBP250.0m UK revolver and
EUR30.0m (GBP25.2m) of the EUR70.0m Euro revolver were drawn.
Including the US Private Placement debt of EUR358.0m (GBP300.2m)
and GBP215.5m, the Group's borrowings totalled GBP625.9m (before
adjustment for unamortised finance costs). As at 30 April 2022, the
weighted average remaining term for the Group's committed borrowing
facilities is 4.5 years, including the new USPP signed in April
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 2022 is 10x ,
calculated on the basis required under our financial covenants.
The LTV covenant is 60% in both the UK and France, where it will
remain until the end of the facilities' terms. As at 30 April 2022,
there is significant headroom in both the UK LTV and the French LTV
covenant calculations. The Group is in compliance with its
covenants at 30 April 2022 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
2021 and H1 2022.
H1 2022 H1 2021
GBP'm GBP'm
Underlying
EBITDA 65.2 54.4
Working capital/ exceptionals/
other (0.1) (0.3)
Adjusted operating cash
inflow 65.1 54.1
Interest payments (5.0) (4.6)
Leasehold rent payments (6.5) (6.5)
Tax payments (2.9) (2.7)
Free cash flow (before investing and
financing activities) 50.7 40.3
Acquisition of subsidiaries,
net of cash acquired (111.5) -
Loans to associates - (0.2)
Investment in associates (0.7) (1.5)
Capital expenditure - investment
properties (44.7) (16.1)
Capital expenditure - property,
plant and equipment (0.3) (0.3)
Net proceeds from disposal of land 1.0 -
Adjusted net cash flow
after investing activities (105.5) 22.2
Issues of share capital - 0.7
Dividends paid (31.9) (23.0)
Net drawdown of borrowings 141.1 19.0
Swap termination income 0.5 -
Debt issuance costs (0.1)
Net increase in cash 4.1 18.9
======== ========
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 increased by GBP11.0m in the
period, reflecting the GBP10.8m increase in underlying EBITDA, and
exceptional items discussed earlier.
Interest payments increased compared to the prior half year as a
result of the increased interest charge associated with the new
USPP's, where in 2021, Safestore extended its borrowing facilities
with the issuance of the equivalent of GBP149.0m new sterling and
euro denominated USPP's.
Tax paid during the period increased slightly by GBP0.2m
principally due to increased payments on account associated with
the stronger European performance. As a result, free cash flow
(before investing and financing activities) grew by GBP10.4m to
GBP50.7m (H1 2021: GBP40.3m).
Investing activities generated a net outflow of GBP156.2m (H1
2021: net outflow of GBP18.1m) from capital expenditure relating to
the acquisition of the remaining 80% of the Joint Venture formed in
2019 with Carlyle Europe Realty as well as acquisition of the new
site at Christchurch, store extensions in the UK and several
development sites in Spain. Of the GBP44.7m cash outflow on
investment properties, GBP42.5m (H1 2021: GBP14.5m) 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 GBP23.0m in H1
2021 to GBP31.9m in H1 2022, and the Group drew a net GBP141.1m of
borrowings, primarily to finance the Joint Venture buy-out and
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 2022 H1 2021
GBP'm GBP'm
Free cash flow (before investing
and financing activities) 50.7 40.3
Addback: Finance lease principal payments 4.0 3.6
Net cash inflow from operating activities 54.7 43.9
H1 2021 H1 2020
GBP'm GBP'm
From table
above:
Adjusted net cash flow after investing
activities (105.5) 22.2
Addback: Finance lease principal
payments 4.0 3.6
Net cash outflow after investing
activities (101.5) 25.8
From consolidated cash
flow:
Net cash inflow from
operating activities 54.7 43.9
Net cash outflow from investing
activities (156.2) (18.1)
Net cash outflow after investing activities (101.5) 25.8
Consolidated income statement
for the six months ended 30 April 2022
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Revenue 4,5 101.0 88.1 186.8
Cost of sales (29.1) (27.7) (56.9)
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Gross profit 71.9 60.4 129.9
Administrative expenses (13.4) (14.9) (34.0)
Share of (loss)/profit in associate (0.3) - -
Underlying EBITDA 5 65.2 54.4 118.0
Exceptional items 6 - (1.9) (1.9)
Share-based payments (6.0) (5.9) (18.3)
Depreciation and variable lease payments (0.5) (0.8) (1.4)
Share of associate's depreciation, interest and tax (0.5) (0.3) (0.5)
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Operating profit before gain on investment properties and other
exceptional gains 58.2 45.5 95.9
Gain on investment properties 13 223.9 127.7 321.1
Other exceptional gains 6 10.5 - -
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Operating profit 292.6 173.2 417.0
Finance income 7 0.7 0.2 0.6
Finance expense 7 (8.1) (6.1) (13.0)
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Profit before income tax 5 285.2 167.3 404.6
Income tax charge 8 (15.2) (9.0) (22.6)
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Profit for the period 270.0 158.3 382.0
--------------------------------------------------------------------- ----- ------------ ------------ ------------
Earnings per share for profit attributable to the equity holders
--------------------------------------------------------------------- ----- ------------ ------------ ------------
- basic (pence) 11 128.1 75.1 181.2
--------------------------------------------------------------------- ----- ------------ ------------ ------------
- diluted (pence) 11 124.5 74.4 176.4
--------------------------------------------------------------------- ----- ------------ ------------ ------------
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 9.4 pence per ordinary share has been
declared for the period ended 30 April 2022 (30 April 2021: 7.5
pence).
Consolidated statement of comprehensive income
for the six months ended 30 April 2022
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------------------------------------- ----------- ----------- -----------
Profit for the period 270.0 158.3 382.0
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss:
Currency translation differences (3.1) (10.6) (20.3)
Net investment hedge 0.7 5.6 10.9
Total other comprehensive expense net of tax (2.4) (5.0) (9.4)
---------------------------------------------------------------- ----------- ----------- -----------
Total comprehensive income for the period 267.6 153.3 372.6
---------------------------------------------------------------- ----------- ----------- -----------
Consolidated balance sheet
as at 30 April 2022
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
-------------------------------------------------------------- ---- ----------- ----------- ----------
Non-current assets
Investment in associates 12 1.8 6.8 7.2
-------------------------------------------------------------- ---- ----------- ----------- ----------
Fair value of investment properties, net of lease liabilities 2,271.1 1,683.8 1,881.8
Add-back of lease liabilities 82.6 76.2 82.1
Investment properties under construction 60.9 18.2 67.4
-------------------------------------------------------------- ---- ----------- ----------- ----------
Total investment properties 13 2,414.6 1,778.2 2,031.3
Property, plant and equipment 3.0 3.0 3.2
Derivative financial instruments 17 0.8 0.8 0.9
Deferred tax assets 9 1.5 0.2 0.8
2,421.7 1,789.0 2,043.4
-------------------------------------------------------------- ---- ----------- ----------- ----------
Current assets
Inventories 0.4 0.3 0.5
Derivative financial instruments 17 1.4 0.9 1.3
Trade and other receivables 27.8 28.8 28.9
Current income tax assets - 0.2 -
Cash and cash equivalents 46.8 38.2 43.2
-------------------------------------------------------------- ---- ----------- ----------- ----------
76.4 68.4 73.9
-------------------------------------------------------------- ---- ----------- ----------- ----------
Total assets 2,498.1 1,857.4 2,117.3
-------------------------------------------------------------- ---- ----------- ----------- ----------
Current liabilities
Derivative financial instruments 17 (0.1) - (0.2)
Trade and other payables (66.3) (55.9) (75.8)
Current income tax liabilities (0.9) - (0.3)
Obligations under lease liabilities (12.5) (12.2) (12.3)
(79.8) (68.1) (88.6)
-------------------------------------------------------------- ---- ----------- ----------- ----------
Non-current liabilities
Bank borrowings 16 (624.3) (466.9) (484.7)
Derivative financial instruments 17 - (0.8) -
Deferred tax liabilities 9 (112.8) (88.7) (97.0)
Obligations under lease liabilities (70.3) (64.2) (70.0)
Provisions 22 (2.2) (2.0) (2.1)
(809.6) (622.6) (653.8)
-------------------------------------------------------------- ---- ----------- ----------- ----------
Total liabilities (889.4) (690.1) (742.4)
-------------------------------------------------------------- ---- ----------- ----------- ----------
Net assets 1,608.7 1,166.7 1,374.9
-------------------------------------------------------------- ---- ----------- ----------- ----------
Shareholders' equity
Ordinary shares 18 2.1 2.1 2.1
Share premium 61.3 61.3 61.3
Translation reserve 2.7 9.5 5.1
Retained earnings 1,542.6 1,093.8 1,306.4
-------------------------------------------------------------- ---- ----------- ----------- ----------
Total equity 1,608.7 1,166.7 1,374.9
-------------------------------------------------------------- ---- ----------- ----------- ----------
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 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 six months ended 30 April 2021
Share Share Translation Retained Total
capital premium reserve earnings Equity
GBPm GBPm GBPm GBPm GBPm
------------------------------ --------- --------- ------------ ---------- --------
Balance at 1 November 2020 2.1 60.6 14.5 958.4 1,035.6
Total comprehensive income
for the period - - (5.0) 158.3 153.3
Transactions with owners
in their capacity as owner:
Dividends (note 10) - - - (26.8) (26.8)
Increase in share capital - 0.7 - - 0.7
Employee share options - - - 3.9 3.9
--------- --------- ------------ ---------- --------
Balance at 30 April 2021 2.1 61.3 9.5 1,093.8 1,166.7
------------------------------ --------- --------- ------------ ---------- --------
Condensed consolidated statement of changes in equity
for the year ended 31 October 2021
Share Share Translation Retained Total
capital premium reserve earnings Equity
GBPm GBPm GBPm GBPm GBPm
------------------------------ --------- --------- ------------ ---------- --------
Balance at 1 November 2020 2.1 60.6 14.5 958.4 1,035.6
Total comprehensive income
for the year - - (9.4) 382.0 372.6
Transactions with owners
in their capacity as owner:
Dividends (note 10) - - - (42.6) (42.6)
Increase in share capital - 0.7 - - 0.7
Employee share options - - - 8.6 8.6
------------------------------ --------- --------- ------------ ---------- --------
Balance at 31 October
2021 2.1 61.3 5.1 1,306.4 1,374.9
------------------------------ --------- --------- ------------ ---------- --------
Consolidated cash flow statement
for the six months ended 30 April 2022
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------------- ----------- ----------- -----------
Profit before income tax 285.2 167.3 404.6
Gain on the revaluation of investment properties (223.9) (127.7) (321.1)
Other exceptional gains (10.5) - -
Share of loss/(profit) in associate 0.3 - -
Depreciation 0.5 0.5 1.0
Net finance expense 7.4 5.9 12.4
Employee share options 3.3 3.9 8.6
Decrease/(increase) in inventories 0.1 - (0.2)
Increase in trade and other receivables (1.2) (5.2) (5.4)
Increase in trade and other payables 3.8 7.1 13.6
Increase in provision 0.1 2.0 2.1
Cash flows from operating activities 65.1 53.8 115.6
----------------------------------------------------- ----------- ----------- -----------
Interest received 0.8 0.3 0.9
Interest paid (8.3) (7.5) (14.1)
Tax paid (2.9) (2.7) (5.4)
----------------------------------------------------- ----------- ----------- -----------
Net cash inflow from operating activities 54.7 43.9 97.0
----------------------------------------------------- ----------- ----------- -----------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired (111.5) - -
Investment in associates (0.7) (1.5) (1.9)
Loans to associates - (0.2) (0.9)
Expenditure on investment and development properties (44.7) (16.1) (62.4)
Proceeds from sale of land 1.0 - -
Purchase of property, plant and equipment (0.3) (0.3) (1.0)
Net cash outflow from investing activities (156.2) (18.1) (66.2)
----------------------------------------------------- ----------- ----------- -----------
Cash flows from financing activities
Issue of share capital - 0.7 0.7
Equity dividends paid (31.9) (23.0) (42.6)
Proceeds from borrowings 241.1 27.0 196.8
Repayment of borrowings (100.0) (8.0) (153.0)
Debt issuance costs (0.1) - (0.7)
Swap termination income 0.5 - -
Principal payment of lease liabilities (4.0) (3.6) (7.5)
Net cash inflow/(outflow) from financing activities 105.6 (6.9) (6.3)
----------------------------------------------------- ----------- ----------- -----------
Net increase in cash and cash equivalents 4.1 18.9 24.5
Exchange loss on cash and cash equivalents (0.5) (0.3) (0.9)
Opening cash and cash equivalents 43.2 19.6 19.6
----------------------------------------------------- ----------- ----------- -----------
Closing cash and cash equivalents 46.8 38.2 43.2
----------------------------------------------------- ----------- ----------- -----------
Reconciliation of net cash flow to movement in net debt
for the six months ended 30 April 2022
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------------------------------- ----------- ----------- -----------
Net increase in cash and cash equivalents (after exchange adjustments) 3.6 18.6 23.6
Increase in debt financing (140.1) (11.6) (35.3)
----------------------------------------------------------------------- ----------- ----------- -----------
(Increase)/decrease in net debt (136.5) 7.0 (11.7)
Net debt at start of period (523.8) (512.1) (512.1)
----------------------------------------------------------------------- ----------- ----------- -----------
Net debt at end of period (660.3) (505.1) (523.8)
----------------------------------------------------------------------- ----------- ----------- -----------
Notes to the interim report for the six months ended 30 April
2022
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 20 June 2022.
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 2021, 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 22 March 2022.
This condensed consolidated interim financial information for 30
April 2022 and 30 April 2021 is unaudited. The interim financial
information for 30 April 2022 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 2022 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, the Directors
have 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. Consideration has been given to compliance with
borrowing covenants along with the uncertainty inherent in future
financial forecasts. The Directors considered the most recent
five-year forecast 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. 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 we have carried
out a reverse stress test to model what would be required to breach
ICR and LTV covenants which indicated highly improbable changes
would be needed before any issues were to arise. With the current
revolving credit facilities of GBP250m and EUR70m maturing on 30
June 2023, in assessing the scenarios, with the current strength of
underlying performance of the business and its balance sheet, the
Directors are of the view that it is reasonable to expect the
refinancing of the Revolving Credit Facility to be available on
similar terms. 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
occur, clear mitigating actions are available to ensure that the
Group remains liquid and financially viable. 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 39 Annual Report and Financial Statements for the
year ended 31 October 2021.
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.
Notes to the interim report for the six months ended 30 April
2022 (continued)
2 Basis of preparation (continued)
The condensed consolidated interim financial information should
be read in conjunction with the annual financial statements for the
year ended 31 October 2021, 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 basic net assets per share is an EPRA measure. EPRA
basic NAV was superseded and transitioned to three new measures:
EPRA Net Reinstatement Value ("NRV"), EPRA Net Tangible Assets
("NTA") and EPRA Net Disposal Value ("NDV") for periods commencing
1 January 2020 or thereafter. Safestore considers EPRA NTA to be
the most consistent with the nature of the Group's business. 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.
Notes to the interim report for the six months ended 30 April
2022 (continued)
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 2022 applicable to
companies under IFRS. The only exception being the Group's fair
value measurement of investment properties. As at the interim
reporting date, 30 April 2022, a sample of the Group's largest
properties, representing approximately 39% (30 April 2021: 42%) of
the value of the Group's investment property portfolio at the
preceding financial year end, has been valued by the Group's
professionally qualified external valuers. In addition, at the same
date, the Directors have prepared estimates of fair values for the
remaining 61% (30 April 2021: 58%) of the Group's investment
property portfolio, incorporating assumptions for estimated
absorption, revenue growth and capitalisation rates to reflect
current market conditions and trading. At the financial year end
100% of the Group's investment property portfolio is fair valued
externally by the same valuers. The IFRS and IFRIC interpretations
as adopted by the United Kingdom that will be applicable at 31
October 2022, including those that will be applicable on an
optional basis, are not known with certainty at the time of
preparing these interim financial statements. Thus, the accounting
policies adopted in these interim financial statements may be
subject to revision to reflect further IFRS and IFRIC
interpretations and
pronouncements issued between 20 June 2022 and publication of
the annual IFRS financial statements for the year ending 31 October
2022.
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 2021. The Directors assess whether the acquisition of
property through the purchase of a corporate vehicle should be
accounted for as an asset purchase or a business combination. Where
the acquired vehicle is an integrated set of activities and assets
that is capable of being conducted and managed to provide a return
to investors, the transaction is accounted for as a business
combination. Where this is not the case the transaction is treated
as an asset purchase. The Directors assess when the risks and
rewards associated with an acquisition or disposal have
transferred. There have been two transactions where properties were
acquired through the purchase of corporate vehicles in the period,
both judged to meet the accounting definition of an asset purchase.
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 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, except where as described above.
4 Revenue
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------- ----------- ----------- -----------
Self-storage income 84.6 72.7 154.3
Insurance income 11.3 10.5 22.3
Other non-storage income 5.1 4.9 10.2
Total revenue 101.0 88.1 186.8
------------------------- ----------- ----------- -----------
Notes to the interim report for the six months ended 30 April
2022 (continued)
5 Segmental information
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,
interest and tax (0.5) - - - (0.5)
------------------------------------ --------- ------ ------ -------- --------
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)/
income (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
------------------------------------ --------- ------ ------ -------- --------
The segmental information for the six months ended 30 April 2021
is as follows:
United Paris Spain Total
Kingdom
GBPm GBPm GBPm GBPm
------------------------------------ --------- ------ ------ --------
Continuing operations
Revenue 67.2 19.5 1.4 88.1
------------------------------------ --------- ------ ------ --------
Underlying EBITDA 40.1 13.5 0.8 54.4
Exceptional items and corporate
transaction costs - (1.9) - (1.9)
Share-based payments (5.3) (0.6) - (5.9)
Depreciation and variable
lease payments (0.7) (0.1) - (0.8)
Share of associate's depreciation,
interest and tax (0.3) - - (0.3)
------------------------------------ --------- ------ ------ --------
Operating profit before
gain on investment properties
and other exceptional gains 33.8 10.9 0.8 45.5
Gain on investment properties 105.8 21.5 0.4 127.7
Operating profit 139.6 32.4 1.2 173.2
Net finance expense (5.0) (0.9) - (5.9)
------------------------------------ --------- ------ ------ --------
Profit before income tax 134.6 31.5 1.2 167.3
------------------------------------ --------- ------ ------ --------
Total assets 1,394.9 441.4 21.1 1,857.4
------------------------------------ --------- ------ ------ --------
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.
Notes to the interim report for the six months ended 30 April
2022 (continued)
6 Exceptional items and other exceptional gains
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------------- ----------- ----------- -----------
Costs relating to corporate transactions
and exceptional property taxation - (1.9) (1.9)
Exceptional items - (1.9) (1.9)
--------------------------------------------- ----------- ----------- -----------
Deemed gain on disposal of equity investment
in associate 5.5 - -
Gain on disposal of land 5.0 - -
--------------------------------------------- ----------- ----------- -----------
Other exceptional gains 10.5 - -
--------------------------------------------- ----------- ----------- -----------
Costs relating to corporate transactions and exceptional
property taxation of GBPnil (30 April 2021: GBP1.9m) were incurred
in the period (30 April 2021: costs in relation to a provision for
potential liabilities in respect of the French commercial tax audit
of financial years 2012 to 2020).
On 30 March 2022, the Group acquired the remaining 80% equity of
Safestore Storage Benelux B.V., from its previous joint venture
partner for EUR53.6m (GBP45.4m) and became a wholly owned
subsidiary (note 12). The original 20% equity investment was
effectively derecognised as a deemed disposal and re-recognised
back at the fair value based on the revised equity value effective
at the 30 March 2022 sale. This resulted in a net gain on deemed
disposal of GBP5.5m included within other exceptional gains.
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.
Notes to the interim report for the six months ended 30 April
2022 (continued)
7 Finance income and costs
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------ ----------- ----------- -----------
Finance income
Interest receivable from loan to associates 0.1 0.1 0.1
Other interest received 0.1 - -
Financial instruments income - 0.1 0.5
Underlying finance income 0.2 0.2 0.6
Exceptional finance income 0.5 - -
Total finance income 0.7 0.2 0.6
------------------------------------------------ ----------- ----------- -----------
Finance costs
Interest payable on bank loans and overdrafts (5.8) (4.8) (9.7)
Amortisation of debt issuance costs on
bank loans (0.3) (0.2) (0.4)
------------------------------------------------ ----------- ----------- -----------
Underlying finance charges (6.1) (5.0) (10.1)
Interest on obligations under lease liabilities (2.5) (2.6) (5.2)
Fair value movement on derivatives 0.8 1.6 2.9
Net exchange losses (0.3) (0.1) (0.6)
Total finance costs (8.1) (6.1) (13.0)
------------------------------------------------ ----------- ----------- -----------
Net finance costs (7.4) (5.9) (12.4)
------------------------------------------------ ----------- ----------- -----------
Included within interest payable of GBP5.8m (30 April 2021:
GBP4.8m) is GBP0.2m (30 April 2021: GBP0.3m) of interest relating
to derivative financial instruments that are economically hedging
the Group's borrowings. The change in fair value of derivatives for
the period is a net gain of GBP0.8m (30 April 2021: net gain of
GBP1.6m). Included within finance income is GBPnil (30 April 2021:
GBP0.1m) in relation to the GBP0.7m (30 April 2021: GBP0.3m)
received on settlement of one tranche of the average rate forward
contracts acquired in March 2020 and settled in April 2022 less the
disposal of the fair value of this derivative asset of GBP0.7m (30
April 2021: GBP0.2m) held on balance sheet prior to settlement.
Further, included within finance income is GBP0.5m (30 April 2021:
GBPnil) in relation to the swaps held in the subsidiary acquired
during the period, Safestore Storage Benelux B.V., and terminated
post acquisition in order to utilise the Group's existing debt
facilities and financial instruments held.
Notes to the interim report for the six months ended 30 April
2022 (continued)
8 Income tax charge
Six months Six months Year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------- ----------- ----------- -----------
Current tax - current year 2.6 2.8 5.5
Current tax - current year exceptional 0.9 - -
Current tax - prior year - (0.5) -
Deferred tax 11.7 6.7 17.1
15.2 9.0 22.6
--------------------------------------- ----------- ----------- -----------
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 19%. Accordingly,
the Group's results for this accounting period are taxed at an
effective rate of 19% (30 April 2021: 19%). Following Finance Act
2021, the main rate of corporation tax will increase from 19% to
25% from 1 April 2023. There will be no deferred taxation impact in
respect of this change in taxation rates when it is
re-introduced.
Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
An exceptional current year current tax charge of GBP0.9m (30
April 2021: GBPnil) 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).
An exceptional prior year current tax credit of GBPnil (30 April
2021: GBP0.5m) arose during the period in relation to a provision
for potential liabilities in respect of the French commercial
property tax audit in respect of financial years 2012 to 2020 (note
22).
Notes to the interim report for the six months ended 30 April
2022 (continued)
9 Deferred income tax
As at As at As at
30 April 30 April 31 October 2021
2022 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------------------------------- ----------- ----------- ----------------
The amounts provided in the accounts are:
Revaluation of investment properties and tax depreciation 112.8 88.5 96.9
Other timing differences - 0.2 0.1
---------------------------------------------------------- ----------- ----------- ----------------
Deferred tax liabilities 112.8 88.7 97.0
---------------------------------------------------------- ----------- ----------- ----------------
Interest rate swap instruments - 0.1 -
Other timing differences 1.5 0.1 0.8
---------------------------------------------------------- ----------- ----------- ----------------
Deferred tax assets 1.5 0.2 0.8
---------------------------------------------------------- ----------- ----------- ----------------
Net deferred tax liability 111.3 88.5 96.2
---------------------------------------------------------- ----------- ----------- ----------------
As at 30 April 2022, the Group had income losses of GBP23.4m (30
April 2021: GBP22.7m) and capital losses of GBP36.4m (30 April
2021: 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
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------------------- ----------- ----------- -----------
For the year ended 31 October 2020:
Final dividend - paid 8 April 2021 (12.70p per share) - 26.8 26.8
For the year ended 31 October 2021:
Interim dividend - paid 6 August 2021 (7.50p per share) - - 15.8
Final dividend - paid 7 April 2022 (17.60p per share) 37.1 - -
Dividends in the statement of changes in equity 37.1 26.8 42.6
Timing difference on payment of withholding tax (5.2) (3.8) -
-------------------------------------------------------- ----------- ----------- -----------
Dividends in the cash flow statement 31.9 23.0 42.6
-------------------------------------------------------- ----------- ----------- -----------
An interim dividend of 9.4 pence per ordinary share (April 2021:
7.5 pence) has been declared. The ex-dividend date will be 7 July
2022 and the record date 8 July 2022, with an intended payment date
of 11 August 2022.
It is intended that 25% (April 2021: 100%) of the interim
dividend of 9.4 pence per ordinary share (April 2021: 7.5 pence)
will be paid as a REIT Property Income Distribution ("PID") net of
withholding tax where appropriate.
The interim dividend, amounting to GBP19.8m (April 2021:
GBP15.8m), has not been included as a liability at 30 April 2022.
It will be recognised in shareholders' equity in the year to 31
October 2022.
Notes to the interim report for the six months ended 30 April
2022 (continued)
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 2022 30 April 2021 31 October 2021
(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 270.0 210.8 128.1 158.3 210.8 75.1 382.0 210.8 181.2
Dilutive share
options - 6.1 (3.6) - 1.9 (0.7) - 5.8 (4.8)
--------------- -------- -------- ------ -------- -------- ---------- -------- -------- ------
Diluted 270.0 216.9 124.5 158.3 212.7 74.4 382.0 216.6 176.4
--------------- -------- -------- ------ -------- -------- ---------- -------- -------- ------
Notes to the interim report for the six months ended 30 April
2022 (continued)
11 Earnings per ordinary share (continued)
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 2022 30 April 2021 31 October 2021
(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 270.0 210.8 128.1 158.3 210.8 75.1 382.0 210.8 181.2
Adjustments:
Gain on investment
properties (223.9) - (106.2) (127.7) - (60.6) (321.1) - (152.3)
Exceptional items - - - 1.9 - 0.9 1.9 - 0.9
Other exceptional
gains (10.5) - (5.0) - - - - - -
Exceptional finance
income (0.5) - (0.2) - - - - - -
Net exchange loss 0.3 - 0.1 0.1 - - 0.6 - 0.3
Gain in fair value
of derivatives (0.8) - (0.4) (1.6) - (0.8) (2.9) - (1.4)
Tax on adjustments
and exceptional
tax 12.1 - 5.7 5.8 - 2.8 16.2 - 7.7
------------------- --------------- -------- ------- --------- -------- ---------- --------- -------- -------
Adjusted 46.7 210.8 22.1 36.8 210.8 17.4 76.7 210.8 36.4
EPRA adjusted:
Fair value
re-measurement
of lease
liabilities
add-back (4.0) - (1.9) (3.6) - (1.7) (7.4) - (3.5)
Tax on lease
liabilities
add-back
adjustment 0.5 - 0.2 0.4 - 0.2 0.9 - 0.4
------------------- --------------- -------- ------- --------- -------- ---------- --------- -------- -------
Adjusted EPRA
basic EPS 43.2 210.8 20.4 33.6 210.8 15.9 70.2 210.8 33.3
Share-based payment
charge 6.0 - 2.8 5.9 - 2.8 18.3 - 8.7
Dilutive shares - 7.8 (0.7) - 7.6 (0.6) - 7.5 (1.5)
------------------- --------------- -------- ------- --------- -------- ---------- --------- -------- -------
Adjusted Diluted
EPRA EPS 49.2 218.6 22.5 39.5 218.4 18.1 88.5 218.3 40.5
------------------- --------------- -------- ------- --------- -------- ---------- --------- -------- -------
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 tor
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 GBP4.0m (30 April
2021: GBP3.6m) and the related tax thereon of GBP0.5m (30 April
2021: GBP0.4m). As an industry standard measure, EPRA earnings is
presented. EPRA earnings of GBP43.2m (30 April 2021: GBP33.6m) and
EPRA earnings per share of 20.4 pence (30 April 2021: 15.9 pence)
are calculated after further adjusting for these items.
Notes to the interim report for the six months ended 30 April
2022 (continued)
12 Investment in associates
As at As at As at
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------- ------------ ------------ ------------
Investment in associates 1.8 6.8 7.2
-------------------------- ------------ ------------ ------------
Safestore Storage Benelux B.V. (formerly CERF Storage JV
B.V.)
Until 30 March 2022, the Group had a 20% interest in Safestore
Storage Benelux B.V. ("SSB"), a company registered and operating in
the Netherlands. SSB was accounted for using the equity method of
accounting. SSB invested in carefully selected self-storage
opportunities in Europe. The Group earned a fee for providing
management services to SSB. This investment as an associate was
considered immaterial relative to the Group's underlying
operations. On 30 March 2022, the Group acquired the remaining 80%
equity from its previous joint venture partner for EUR53.6m
(GBP45.4m) and became a wholly owned subsidiary. The original 20%
equity investment and provisional accumulated share of losses in
associate as at 30 March 2022 of GBP5.9m was effectively
derecognised as a deemed disposal and re-recognised back at the
fair value of GBP11.4m based on the revised equity value at 30
March 2022. This resulted in a net gain on deemed disposal of
GBP5.5m (see note 6).
The aggregate carrying value of the Group's 20% interest in SSB
at 30 March 2022 was GBP8.7m (31 October 2021: GBP8.9m), made up of
an investment of GBP5.9m (31 October 2021: GBP6.2m), a loan to the
associate including interest accrued of GBP2.8m (31 October 2021:
GBP2.7m) (note 21). The Group's provisional share of losses from
continuing operations for the period to 30 March 2022 was GBP0.3m
(30 April 2021: GBPnil). The Group's provisional share of total
comprehensive loss in associates for the period to 30 March 2022
was GBP0.3m (30 April 2021: GBPnil).
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 will be developing a new store as part of a wider
development programme located in Paris. The development project
will be managed by its joint venture partners, therefore the Group
will have no operational liability during this phase. During the
period the Group have invested GBP0.8m (EUR0.9m) (30 April 2021:
GBP0.9m (EUR1.0m)) into this investment. 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 (31 October 2021: GBP1.0m), made up of an investment of
GBP1.8m (31 October 2021: GBP1.0m). The Group's share of profits
from continuing operations for the period was GBPnil (30 April
2021: GBPnil). The Group's share of total comprehensive income of
associates for the period was GBPnil (30 April 2021: GBPnil).
Notes to the interim report for the six months ended 30 April
2022 (continued)
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 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
--------------------------- -------------------------- ------------------- -------------------------- ------------
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 2020 1,557.5 76.9 14.0 1,648.4
Additions 7.4 3.7 6.5 17.6
Reclassification 3.7 - (3.7) -
Revaluation movement 129.8 - 1.5 131.3
Fair value re-measurement
of lease liabilities
add-back - (3.6) - (3.6)
Exchange movements (14.6) (0.8) (0.1) (15.5)
--------------------------- -------------------------- ------------------- -------------------------- ------------
Balance at 30 April 2021 1,683.8 76.2 18.2 1,778.2
--------------------------- -------------------------- ------------------- -------------------------- ------------
The gain on investment properties of GBP223.9m (30 April 2021:
GBP127.7m) as disclosed in the consolidated income statement
comprises a GBP227.9m (30 April 2021: GBP131.3m) 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 GBP4.0m (30 April 2021: GBP3.6m).
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 2022 is explained in note 14.
The fair value of investment property held by the Group
classified as the add-back of lease liabilities of GBP82.6m (30
April 2021: GBP76.2m) 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 GBP82.8m (30 April 2021: GBP76.4m) differs by
GBP0.2m (30 April 2021: GBP0.2m) which relates to the right-of-use
asset classified as part of property, plant and equipment.
Notes to the interim report for the six months ended 30 April
2022 (continued)
14 Valuations
External valuation
A sample of the Group's largest properties, representing
approximately 39% of the value of the Group's investment property
portfolio at 31 October 2021, has been valued by the Group's
external valuers, C&W, as at 30 April 2022. 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 2022.
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
2021, was less than 5%. We anticipate that the proportion of fees
for the financial year to 31 December 2022 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.
Market uncertainty
Historically, the self-storage market has been relatively
illiquid owing to a limited number of property sales. Over the last
2 years, the market has become more liquid with a significant
increase in the number of transactions. This is evidenced by the
Self Storage Association Annual Report, which listed a total of 20
transactions for 2021. This is consistent with 2020, where the same
number of transactions was reported. Consequently, there is greater
visibility over pricing, which has resulted in market uncertainty
no longer being a factor as at the valuation date of 30 April 2022
.
Portfolio premium
C&W's valuation report further confirms that the properties
have been valued individually but that if the portfolio was to be
sold as a single lot or in selected groups of properties, the total
value could be different. C&W states that in current market
conditions it is of the view that there could be a material
portfolio premium.
Further details of the valuation carried out by C&W as at 31
October 2021, 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 2021. 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 61% of the Group's
investment property portfolio, incorporating assumptions for
estimated absorption, revenue growth and capitalisation rates to
reflect current market conditions and trading.
Notes to the interim report for the six months ended 30 April
2022 (continued)
14 Valuations (continued)
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
2022 averages 89.11% (31 October 2021: 89.10%). 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 20.43 months (31 October 2021: 18.27
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 6.35%
(31 October 2021: 6.73%), rising to stabilised net yield
pre-administration expenses of 6.77% (31 October 2021: 6.90%).
-- The weighted average freehold exit yield on UK freeholds is
5.80% (31 October 2021: 6.07%), France freeholds is 5.69% (31
October 2021: 5.88%) and on Spain freeholds is 5.27% (31 October
2021: 5.38%). The weighted average freehold exit yield for all
freeholds adopted 5.78% (31 October 2021: 6.03%).
-- 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 8.41% (31 October 2021: 8.62%) in the France
portfolio is 8.78% (31 October 2021: 8.98%) and in the Spain
portfolio is 7.77% (31 October 2021: 7.87%). The weighted average
annual discount rate adopted (for both freeholds and all
leaseholds) is 8.50% (31 October 2021: 8.72%).
-- 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.
Notes to the interim report for the six months ended 30 April
2022 (continued)
14 Valuations (continued)
As a result of these exercises, as at 30 April 2022, the Group's
investment property portfolio has been valued at GBP2,271.1m (30
April 2021: GBP1,683.8m), and a revaluation gain of GBP229.8m (30
April 2021: GBP129.8m) 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 2022.
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 47.7 (43.7) 31.6 (31.7) (18.0)
--------- --------------- --------------- ------------ ------------ ------------------------
15 Net assets per share
As at As at As at
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
Analysis of net asset value GBPm GBPm GBPm
--------------------------------------------------------------------- ----------- ----------- -----------
Balance sheet net assets 1,608.7 1,166.7 1,374.9
Adjustments to exclude:
Fair value of derivative financial instruments (net of deferred tax) (2.1) (1.0) (2.0)
Deferred tax liabilities on the revaluation of investment properties 112.8 88.5 96.9
--------------------------------------------------------------------- ----------- ----------- -----------
EPRA NTA 1,719.4 1,254.2 1,469.8
--------------------------------------------------------------------- ----------- ----------- -----------
Basic net assets per share (pence) 763 554 652
EPRA basic NTA per share (pence) 816 596 697
Diluted net assets per share (pence) 742 549 635
EPRA diluted NTA per share (pence) 793 590 679
--------------------------------------------------------------------- ----------- ----------- -----------
Number Number Number
--------------------------------------------------------------------- ----------- ----------- -----------
Shares in issue 210,825,202 210,607,948 210,782,444
--------------------------------------------------------------------- ----------- ----------- -----------
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 1,902 shares (30 April 2021: 3,259
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
6,087,545 shares (30 April 2021: 1,851,676 shares).
Notes to the interim report for the six months ended 30 April
2022 (continued)
16 Borrowings
The tables below set out the Group's borrowings position as at
30 April 2022:
As at As at As at
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
Non-current GBPm GBPm GBPm
-------------------------------------- ------------ ------------ ------------
Borrowings:
Secured - bank loans 110.2 183.1 57.3
Secured - US Private placement notes 515.7 285.1 429.2
Debt issue costs (1.6) (1.3) (1.8)
-------------------------------------- ------------ ------------ ------------
624.3 466.9 484.7
-------------------------------------- ------------ ------------ ------------
The Group's borrowings consist of bank facilities of GBP250m and
EUR70m maturing in June 2023. US Private Placement Notes of EUR358m
which have maturities extending to 2024, 2026, 2027, 2028, 2029 and
2033 and GBP215.5m which have maturities extending to 2026, 2028,
2029 and 2031, which includes an additional EUR105m drawn in April
2022 expiring in 2029.
The borrowings were secured by a fixed charge over the Group's
investment property portfolio.
Borrowings are stated before unamortised issue costs of GBP1.6m
(30 April 2021: GBP1.3m). The bank loans and private placement
notes were repayable as follows:
As at As at As at
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------- ------------ ------------ ------------
Between one and two years 110.2 - 57.3
Between two and five years 136.4 227.4 137.1
After more than five years 379.3 240.8 292.1
---------------------------- ------------ ------------ ------------
Borrowings 625.9 468.2 486.5
Unamortised issue costs (1.6) (1.3) (1.8)
---------------------------- ------------ ------------ ------------
624.3 466.9 484.7
---------------------------- ------------ ------------ ------------
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").
Notes to the interim report for the six months ended 30 April
2022 (continued)
16 Borrowings (continued)
The effective interest rates at the balance sheet date were as
follows:
As at As at As at
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
----------------------- ------------------ ------------------ ------------------
Bank loans (Sterling) Quarterly or Quarterly or Quarterly or
monthly SONIA monthly LIBOR monthly SONIA
plus 1.25% plus 1.25% plus 1.25%
Bank loans (Euro) Quarterly EURIBOR Quarterly EURIBOR Quarterly EURIBOR
plus 1.25% plus 1.25% plus 1.25%
Private placement Weighted average Weighted average Weighted average
notes (Euro) rate of 1.80% rate of 1.63% rate of 1.52%
Private placement
notes (Sterling) 2.55% 2.76% 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
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------- ------------ ------------ ------------
Expiring beyond one year 198.5 127.8 251.8
-------------------------- ------------ ------------ ------------
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
2022 2021 2021
(unaudited) (unaudited) (audited)
Assets per the balance sheet GBPm GBPm GBPm
------------------------------------- ------------ ------------ ------------
Derivative financial instruments -
Level 2 2.2 1.7 2.2
Amounts due from associates - Level
2 - 2.2 2.7
------------------------------------- ------------ ------------ ------------
Notes to the interim report for the six months ended 30 April
2022 (continued)
17 Financial instruments (continued)
As at As at As at
30 April 30 April 31 October
2022 2021 2021
(unaudited) (unaudited) (audited)
Liabilities per the balance sheet GBPm GBPm GBPm
------------------------------------ ------------ ------------ ------------
Derivative financial instruments -
Level 2 0.1 0.8 0.2
------------------------------------ ------------ ------------ ------------
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
2022 2021 2021
(unaudited) (unaudited) (audited)
Called up, issued and fully paid GBPm GBPm GBPm
------------------------------------------ ------------ ------------ ------------
210,827,104 (30 April 2021: 210,816,276)
ordinary shares of 1p each 2.1 2.1 2.1
------------------------------------------ ------------ ------------ ------------
19 Capital commitments
The Group had capital commitments of GBP108.0m as at 30 April
2022 (30 April 2021: GBP98.2m).
20 Seasonality
Self-storage revenues are subject to seasonal fluctuations, with
peak sales normally occurring in the second and third quarters of
the calendar year. This is due to seasonal weather conditions and
holiday periods leading to fluctuating demand for storage. For the
six months ended April 2021, on a like-for-like basis adjusting for
the impact of changes to the Group's store portfolio, the level of
self-storage revenues represented 47.1% of the annual level of
self-storage revenue in the year ended 31 October 2021 (30 April
2021: six months ended April 2020 49.1%).
Notes to the interim report for the six months ended 30 April
2022 (continued)
21 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 Safestore Storage Benelux B.V. (formerly CERF
Storage JV B.V.)
As described in note 12, 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.
During the period to 30 March 2022 the Group recharged GBP0.2m
(30 April 2021: GBP0.1m) to SSB for costs paid on behalf of SSB and
were repaid GBP0.2m (30 April 2021: GBP0.1m) of cumulative
outstanding balances. GBP0.1m (30 April 2021: GBP0.1m) of unpaid
interest was accrued and charged on the EUR3.0m (30 April 2021:
EUR2.2m) principal loan note outstanding, GBP2.8m (30 April 2021:
GBP2.1m). Management fees charged and settled during the period to
30 March 2022 was GBP0.3m (30 April 2021: GBP0.5m). The total
amount outstanding at 30 March 2022 included within trade and other
receivables was GBP2.8m (30 April 2021: GBP2.3m).
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 GBP0.8m (EUR0.9m) 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 2022 included within trade and other receivables was
GBPnil (30 April 2021: GBPnil).
As described in note 6, during the 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 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).
22 Provisions
In France, the basis on which property taxes have been assessed
has been challenged by the tax authority for financial years 2011
onwards. In March 2021 the French Court of Appeal delivered a
judgement, which resulted in a partial success for the Group;
however, a further appeal has been lodged with the French Supreme
Court against those decisions on which the Group was unsuccessful.
A provision is included in the consolidated financial accounts of
GBP2.2m at 30 April 2022 (31 October 2021: GBP2.1m), to reflect the
increased uncertainty surrounding the likelihood of a successful
outcome. Of the total provided, GBP0.1m has been charged in
relation to 6 months to 30 April 2022 (30 April 2021: GBP0.1m)
within cost of sales (underlying EBITDA).
It is possible that the French tax authority may appeal the
decisions of the French Court of Appeal on which the Group was
successful to the French Supreme Court. The maximum potential
further exposure in relation to these issues at 30 April 2022 is
GBP2.8m (31 October 2021: GBP2.7m). 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 2022 (31 October 2021:
GBP1.3m).
Notes to the interim report for the six months ended 30 April
2022 (continued)
23 Contingent liabilities
As part of the Group banking facility, the Company has
guaranteed the borrowings totalling GBP625.9m (30 April 2021:
GBP468.2m) of fellow Group undertakings by way of a charge over all
of its property and assets. There are similar cross guarantees
provided by the Group companies in respect of any bank borrowings
which the Company may draw under a Group facility agreement. The
financial liability associated with this guarantee is considered
unlikely to crystallise and therefore no provision has been
recorded.
The Group also has a contingent liability in respect of property
taxation in the French subsidiary as disclosed in note 22.
Notes to the interim report for the six months ended 30 April
2022 (continued)
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 33 to 37 of the
Annual Report and Financial Statements for the year ended 31
October 2021, 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
-- Consequences of the UK's decision to leave the EU ("Brexit")
The Company regularly assesses these risks together with the
associated mitigating factors listed in the 2021 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.
The impact of the ongoing global pandemic, Covid-19, has had
limited discernible impact on the Group's performance during the
period. The Group continues to monitor the Covid-19 pandemic as we
transition out of the Covid-19 restrictions across our geographical
locations.
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 2022
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.
There have been the following changes to the Directors of
Safestore Holdings plc to those listed in the Safestore Holdings
plc Annual Report for 31 October 2021: Jane Bentall was appointed
as a Director on 18 May 2022 and Claire Balmforth resigned as a
Director on 31 May 2022. 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
20 June 2022 20 June 2022
Chief Executive Officer Chief Financial Officer
INDEPENT REVIEW REPORT TO SAFESTORE HOLDINGS PLC
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(th) April 2022 which comprises the 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 23. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, 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.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and International Financial Reporting 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".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 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. 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.
Conclusion
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(th)
April 2022 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.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. 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
20 June 2022
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END
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