Overview
Annual
Report
2023
Safestore Holdings plc
Annual report and financial statements 2023
Overview
A year of significant
strategic progress
I am pleased that 2023 has been a resilient year of significant
strategic and operational progress building on two years of
outperformance in which we delivered total like-for-like8 revenue
growth of over 30.3% and Adjusted Diluted EPRA EPS growth
of 57.3%.
The Group’s industry leading REVPAF10 grew by 1.9% on a like-for-like8
basis whilst total Group revenue grew by 5.5% reflecting recently added
new stores and the annualisation effect of our acquisition of the
Benelux business.
We have made excellent strategic progress during the year having
opened, acquired or extended thirteen stores across three countries,
adding c. 500,000 sq ft of MLA to the portfolio. In addition, we have
grown the development pipeline to a further 1.5 million sq ft across
30 projects which represents 18% of the existing MLA of the business
and will contribute £25–30 million upside to EBITDA upon stabilisation.
Following our previous successful JV with Carlyle, we partnered again
to facilitate the Group’s entry into the under-penetrated German
market and the integration of our Benelux business, acquired in 2022,
is now complete.
Our strong and flexible balance sheet was significantly enhanced by
the agreement of an unsecured four-year £400 million multi-currency
RCF at the beginning of the year which increases funding capacity,
allowing us to continue to consider strategic, value-accretive
investments as and when they arise.
Importantly, the underlying fundamentals of the European self storage
industry with limited supply, strong barriers to entry and a steadily
growing product awareness are as strong as ever. We believe that
the Covid-19 period has acted as an accelerator of growth for the
still relatively immature self storage industry.
Whilst demand (as measured by enquiry growth) stabilised during the
year at a level that is below 2022, we are still seeing enquiry levels that
are ahead of the pre-Covid period.
Over the last ten years, Safestore has delivered an industry leading
16% CAGR of its Adjusted Diluted EPRA EPS. During that period,
we expanded our geographical reach to six European countries
leveraging and improving our platform and central functions while
carefully managing investment risk. I’m confident that Safestore
will continue to play a leading role in the development of the
self storage industry across Europe, delivering significant further
value to its stakeholders.
Our industry leading business model remains unchanged and we
have substantial EPS growth to deliver, both from filling the 1.9 million
sq ft of fully invested, currently unlet space, and from the new sites
and expansion of existing sites in our pipeline, across major cities in
the UK and continental Europe. Safestore has a proven track record,
and as the returns we deliver are significantly ahead of our cost of
debt, we look to the future with confidence.
Finally, I would like to thank all our colleagues in the UK, France, Spain,
the Netherlands and Belgium for their commitment and loyalty in 2023.
We are appreciative of their efforts.
Frederic Vecchioli
Chief Executive Officer
Learn more about our Sustainability from page 44
Learn more about our Corporate Governance from page 78
Contents
Overview
1
2
4
5
Highlights
Financial highlights
About us
Investment case
Chairman’s statement
Chief Executive’s statement
Financial review
Strategic report
6
8
20
32 Engaging with our stakeholders
and our Section 172(1) statement
35 Principal risks
42 Viability statement
43 Compliance with Task Force on Climate-
related Financial Disclosures (“TCFD”)
44 Sustainability
Introduction to corporate governance
Corporate governance
78
80 Board of Directors
82 Corporate governance
87 Nomination Committee report
89 Audit Committee report
93 Directors’ remuneration report
122 Directors’ report
126 Statement of Directors’ responsibilities
Independent auditor’s report
Financial statements
127
134 Consolidated income statement
134 Consolidated statement
of comprehensive income
135 Consolidated balance sheet
136 Consolidated statement of changes
in shareholders’ equity
137 Consolidated cash flow statement
138 Notes to the financial statements
170 Company balance sheet
171 Company statement of changes
in equity
172 Notes to the Company
financial statements
176 Glossary
178 Directors and advisers
Overview
Highlights
Financial performance
• Group revenue for the year up 5.5% (up 4.8% in CER1)
• Like-for-like8 Group revenue for the year in CER1 up 1.7%
• Underlying EBITDA2 up 4.5% in CER1 which, combined with
a reduced gain on investment properties of £93.8 million
(FY2022: £381.6 million), resulted in statutory operating profit9
of £230.4 million (FY2022: £514.5 million)
• Strong cost control with like for like costs increasing 0.3% on
a CER basis
• Adjusted Diluted EPRA Earnings per Share6 up 0.8% at 47.9 pence
(FY2022: 47.5 pence)
• 1% increase in the dividend for the year to 30.1 pence
(FY2022: 29.8 pence) in line with our progressive policy
Strategic progress
• New stores or acquisitions adding c. 500,000 sq ft of new MLA4
across thirteen projects in the financial year (five in the UK, six in
Spain and two in the Netherlands)
• Total Group development and extension pipeline increased to 30
projects and 1.5 million sq ft representing c. 18% of the existing
portfolio providing £25–£30 million of future EBITDA at stabilisation
• Purchases of the freehold interests of two stores in Barcelona and
West Birmingham
• Lease extensions completed for four stores in Edinburgh,
London- Charlton, London- Slough and Burnley
• Successful integration of Benelux acquisition
• Entry into German market via a new Joint Venture15 (“JV”) with
Carlyle which has acquired the seven-store myStorage business
with 326,000 sq ft of MLA4
Strong and flexible balance sheet
• 9.3% increase in property valuation (including investment properties under construction)
• 4.8% increase in EPRA basic NTA per share to £9.52 (FY2022: £9.08)
• New ESG linked Revolving Credit Facilities (“RCFs”) completed in November 2022 with an increased £400 million unsecured multi-currency
four-year facility (with two one- year extension options, the first of which has been completed recently).Margins remain at 1.25% in line with
previous RCFs and all facilities, including Private Placement Notes, are unsecured
• Approximately £200 million of headroom under the RCF plus £100 million accordion facility
• 73% of debt at fixed interest rates with tenors from 2024 to 2033
• Group loan-to-value ratio (“LTV”11) at 25.4%, calculated on net debt (31 October 2022: 23.6%) and interest cover ratio (“ICR”12) at 6.7x
(31 October 2022: 10.4x)
Key Performance Indicators
Revenue (£’m)
£224.2m
+5.5%
Underlying EBITDA2 (£’m)
Dividend (pence per share)
£142.2m
+5.3%
30.10p
+1.0%
23
22
21
20
19
18
17
224.2
212.5
186.8
162.3
151.8
143.9
129.9
23
22
21
20
19
18
17
142.2
135.1
118.0
93.9
87.5
82.9
74.4
23
22
21
20
19
18
17
30.10
29.80
25.10
18.60
17.50
16.25
14.00
Safestore Holdings plc | Annual report and financial statements 2023
1
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Financial highlights
Key measures
Underlying and operating metrics – total
Revenue (£’m)
Underlying EBITDA (£’m)
Closing Occupancy (let sq ft – million)
Closing Occupancy (% of MLA)
Maximum Lettable Area (MLA)4
Average Storage Rate (£)
Adjusted Diluted EPRA Earnings per Share (pence)
Free Cash Flow (£’m)
EPRA Basic NTA per Share (£)
REVPAF (£)10
Underlying and operating metrics – like-for-like8
Revenue (£'m)
Underlying EBITDA (£'m)
Closing Occupancy (let sq ft – million)
Closing Occupancy (% of MLA)
Average Occupancy (let sq ft – million)
Maximum Lettable Area (MLA)4
Average Storage Rate (£)
REVPAF (£)10
Statutory metrics
Operating profit (£’m)
Profit before tax (£’m)
Diluted Earnings per Share (pence)
Dividends per Share (pence)
Cash inflow from operating activities (£’m)
Basic net assets per share (pence)
Year ended
31 October
2023
Year ended
31 October
2022
Change
Change – CER 1
224.2
142.2
6.231
77.0%
8.09
30.26
47.9
89.2
952
27.70
209.9
136.1
5.583
79.6%
5.586
7.02
31.57
29.91
230.4
207.8
91.8
30.1
498.0
888
212.5
135.1
6.317
82.1%
7.70
29.25
47.5
101.4
908
27.59
205.3
131.6
5.793
82.8%
5.779
7.00
29.89
29.34
514.5
498.8
212.4
29.8
109.8
848
5.5%
5.3%
-1.4%
-5.1%
5.1%
3.5%
0.8%
-12.0%
4.8%
0.4%
2.2%
3.4%
-3.6%
-3.2%
-3.3%
0.3%
5.6%
1.9%
-55.2%
-58.3%
-56.8%
1.0%
-10.7%
4.7%
4.8%
4.5%
n/a
n/a
n/a
2.7%
n/a
n/a
n/a
-0.2%
1.7%
2.8%
n/a
n/a
n/a
n/a
5.0%
1.4%
n/a
n/a
n/a
n/a
n/a
n/a
2
Safestore Holdings plc | Annual report and financial statements 2023
Notes to Highlights, Financial highlights, Chairman’s statement and Chief Executive’s statement
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 reviews and monitors 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 6 and 13 below and ‘Non-GAAP financial information’ in the notes to the financial statements.
1
2
CER is Constant Exchange Rate (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).
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 cost charges.
Underlying profit before tax is defined as Underlying EBITDA less leasehold rent cost, depreciation charged on property, plant and equipment and net finance charges relating to bank
loans and cash.
3
Occupancy excludes offices but includes bulk tenancy. As at 31 October 2023, closing occupancy includes 18,000 sq ft of bulk tenancy (31 October 2022: 24,000 sq ft).
4 MLA is Maximum Lettable Area. At 31 October 2023, Group MLA was c. 8.09 million sq ft (FY2022: c. 7.70 million sq ft).
5
6
7
8
9
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.
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 is 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.
Free cash flow is defined as cash flow before investing and financing activities but after leasehold cost payments.
Like-for-like adjustments remove the impact of the 2023 acquisition of Apeldoorn, the 2023 openings of Wigan, London-Morden, Ellesmere Port, North Barcelona, South Barcelona,
Central Barcelona 3, South Madrid, North Madrid, East Madrid, Nijmegen, and Amersfoort, the 2022 acquisition of the Netherlands and Belgium Joint Venture, the 2022 acquisition of
Christchurch, and the 2022 openings of London-Bow and Central Barcelona.
Operating profit decreased by £284.1 million to £230.4 million (FY2022: £514.5 million) principally as a result of a decrease in the gain on investment properties of £287.8 million to
£93.8 million (FY2022: £381.6 million), as well as an increase of £7.1 million or 5.3% in Underlying EBITDA as a result of stronger trading performance. Profit before income tax in FY2022
additionally included exceptional items of £10.8 million, being other exceptional gains. This included £5.5 million relating to the valuation gain of the 20% equity investment held in the Joint
Venture with CERF, when the Group acquired the remaining 80% on 30 March 2022 and £5.1 million relating to the net gain on disposal of the Paris-Nanterre site in November 2021.
10 REVPAF is an alternative performance measure used by the business. REVPAF stands for Revenue per Available Square Foot and is calculated by dividing revenue for the period by
weighted average available square feet for the same period.
11
LTV ratio is Loan-to-Value ratio, which is defined as gross debt (excluding lease liabilities) as a proportion of the valuation of investment properties and investment properties under
construction (excluding lease liabilities). At 31 October 2023, the Group LTV ratio was 25.4%, calculated on a net debt basis.
12 ICR is interest cover ratio and is calculated as the ratio of Underlying EBITDA after leasehold costs to net interest payable.
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 11 of the Financial Statements.
14 In 2019, Safestore entered a strategic arrangement with Carlyle to enter the Benelux market, with an investment of 20%. This arrangement represented a Joint Venture and has been
referred to as such. On 30 March 2022, the Group acquired the remaining 80% of the Joint Venture with CERF. Prior to acquiring the 80%, the Joint Venture with CERF, which represented
a 20% investment, was accounted for as an associate using the equity method of accounting, as described in the ‘Investment in associates’ note to the financial statements.
15 On 1 December 2022, the Group made an initial investment into a new Joint Venture with Carlyle, to enter the German self storage market, of c. €2.2 million for a 10% share. The Group
will also earn a fee for providing management services to the Joint Venture.
16 Store Protect has replaced our customer goods insurance programme from 1 November 2023, attracting VAT rather than Insurance Premium Tax (“IPT”). When comparing the first two
months of the 2024 financial year, the 2023 comparative included revenue of £0.4 million representing 12% IPT on insurance sales for the two months. For 2024, VAT is not included in the
revenue. The overall impact of these changes is neutral at EBITDA. With the LFL revenue figure adjusted to remove the IPT from the prior year, LFL revenue is down 0.6%. Including the IPT
in revenue in the prior year would result in a variance of -1.6%.
Safestore Holdings plc | Annual report and financial statements 2023
3
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS About us
Who we are, what we do
5
6 countries
751
753 colleagues
179
190 stores
7.7m
8.09m sq ft Maximum
Lettable Area
Wholly owned business
Managed on behalf of Joint Venture
Our purpose
To add stakeholder value by developing profitable and sustainable spaces
that allow individuals, businesses and local communities to thrive
Read more on page 82
Our business model
We acquire, develop and operate sustainable self storage assets in attractive European markets
Read more on page 17
Our strategy
1.
2.
3.
Optimising trading performance
of existing portfolio
Maintaining a strong and
flexible capital structure
Selective portfolio management
and expansion opportunities
Read more on page 9
How we ensure sustainability
Our people
Provide a great place to work
Our customers
Deliver a great customer
experience and help customers
live and grow sustainably
Read more on page 44
Our community
Benefit local communities
Our environment
Protect the planet from our
activities; and manage risks to our
business from climate change
Our values
Our values, created by our store teams, are the foundation of everything we do
We love customers
We lead the way
We have
great people
We dare to
be different
We get it
See page 53 for more details
Having strong relationships with our key stakeholders
We have a wide range of stakeholders. What matters to each, how we engage and how
decision-making considers their expectations are set out in our Section 172 statement
Read more on pages 32 to 34
4
Safestore Holdings plc | Annual report and financial statements 2023
Investment case
How we create value
Safestore has a proven track record in long term value creation.
The business model remained resilient during the global financial crisis
and the Covid-19 pandemic, with a leading presence in London, Paris,
and key markets within the self storage sector. This is underpinned by
developing profitable and sustainable spaces that allow individuals,
businesses, and local communities to thrive.
1.
2.
3.
Attractive market
• Under-supplied and growing industry
Unique portfolio
• European leading platform
• Significant barriers to entry – constrained
• Leading positions in key
People
• A diverse community of well-trained,
motivated and engaged colleagues
supply of attractive locations
‘space- constrained’ European cities
• Investors in People Platinum
• Unlet invested space equivalent to
around 90 stores including pipeline with
further development
• Growth potential in UK/France and further
expansion in the Netherlands, Belgium,
German, and Spanish markets
accreditation awarded
4.
5.
6.
Strategic benefits of scale
• In-house expertise and scalable
marketing technology
Strong cash generation
• Scalable platform able to finance
Quality of earnings
• Diversified income stream from
development and acquisition opportunities
90,000 customers
• Systems and pricing analytical capacities
• UK Leading National Accounts offering
• Intelligent use of working capital, positive
operating cash flow, strong and flexible
capital structure, and quality income-
generating assets
• Strong dividend growth
• Existing customers from prior years driving
70% to 80% of revenue
• High margins – low break-even
• Low maintenance CAPEX
Safestore Holdings plc | Annual report and financial statements 2023
5
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Strategic report
Chairman’s statement
“Our purpose remains simple – to add
stakeholder value by developing profitable
and sustainable spaces that allow individuals,
businesses and local communities to thrive.”
David Hearn
Chairman
T he last year has demonstrated Safestore’s resilience and
significant strategic and operational progress, after two
exceptional years over which the Group delivered 57%
growth in Earnings per Share. After four years in the role,
I continue to be impressed by the dedication and resilience
of the store, property development and Head Office teams which have
been instrumental in delivering this progress.
Our purpose remains simple: to continue to add stakeholder
value by developing profitable and sustainable spaces that allow
individuals, businesses and local communities to thrive. Our strategy
is underpinned by our values, our behaviours and our governance
structure which shape our culture and remain central to the way we
conduct our business.
I would like to take this opportunity to congratulate all my colleagues
throughout the Group for their exceptional contributions this year.
Strategic progress
Management’s first priority remains to maximise the economic return
on our existing store portfolio and its 1.9 million sq ft of fully invested
unlet space, building on the significant operational improvements made
over the current management team’s tenure.
In addition to improving returns from our existing portfolio, the Group
has continued to make significant strategic progress in expanding its
presence across Europe through a combination of new store openings
and acquisitions. The Group has now acquired 47 and opened 31
stores over the last seven years and all are performing in line with
or better than their original business cases. Our Spanish business,
acquired as a four-store portfolio in 2019, now has eleven open stores
and a further five in the pipeline. Our Benelux business which was
acquired in 2022 is now fully integrated into the business and has
a pipeline of a further five stores. Overall, we have a development
property pipeline of an additional 1.5 million sq ft of MLA, which
provides significant future opportunity for the business and underpins
our continued growth.
Our Joint Venture15 with Carlyle in Germany provides us an exciting
platform to gain exposure to a new attractive geography and I believe
that Safestore’s highly scalable platform will allow us to take advantage
of further opportunities in due course.
The establishment, in November 2022, of a £400 million unsecured
multi-currency RCF at attractive margins offers us significantly greater
strategic flexibility to support these growth plans.
Financial results
Revenue for the year was £224.2 million, 5.5% ahead of last year
(FY2022: £212.5 million), or 4.8% ahead on a constant currency basis.
Like-for-like8 revenue was up 1.7% in constant currency.
The growth in like for like revenue, combined with strong cost control
despite the challenging inflationary environment, was particularly
encouraging, delivering a further improvement in like for like
margins. On a total basis, Underlying EBITDA2 increased by 5.3% to
£142.2 million (FY2022: £135.1 million) and on a constant currency
basis by 4.5%.
Statutory operating profit reduced by £284.1 million to £230.4 million
in 2023 (FY2022: £514.5 million), reflecting a lower investment property
gain in 2023 combined with the increase in Underlying EBITDA2 and a
reduction in the share-based payments charge.
Adjusted Diluted EPRA Earnings per Share6 grew by 0.8% to 47.9
pence (FY2022: 47.5 pence). Adjusted Diluted EPRA Earnings per
Share6 has grown by 37.2 pence or 348% over the last ten years.
Statutory Diluted Earnings per Share decreased to 91.8 pence
(FY2022: 212.4 pence) as a result of the reduced gain on valuation of
investment properties, offset by an increase in Adjusted Diluted EPRA
Earnings per Share6.
The Group’s balance sheet remains robust with a Group LTV11 ratio of
25.4%, calculated on net debt (FY2022: 23.6%) and an ICR12 of 6.7x
(FY2022: 10.4x) leaving considerable headroom against our banking
covenants and internal thresholds. This represents a level of gearing
we consider appropriate for the business to enable the Group to
increase returns on equity, maintain financial flexibility and achieve our
medium term strategic objectives.
Finally, this year’s results consolidated a sustained period of excellent
performance by the Group. Over the last ten years, the management
and store teams have delivered a total shareholder return of 607.9%,
ranking at number one in the UK property sector. Since flotation in
2007, Safestore has also delivered the highest total shareholder return
of any UK listed self storage operator.
6
Safestore Holdings plc | Annual report and financial statements 2023
Dividend
Reflecting the Group’s progressive dividend policy, the Board is
pleased to recommend a final dividend of 20.2 pence per share
(FY2022: 20.4 pence) resulting in a full year dividend up 1% to 30.1
pence per share (FY2022: 29.8 pence).
Over the last ten years, the Group has grown the dividend by 423%
or 24.4 pence per share during which period the Group has returned
to shareholders a total of 180.1 pence per share. The total dividend
for the year is covered 1.59 times by Adjusted EPRA Diluted Earnings
(2022: 1.59 times). Shareholders will be asked to approve the dividend
at the Company’s Annual General Meeting on 13 March 2024 and,
if approved, the final dividend will be payable on 9 April 2024 to
shareholders on the register at close of business on 7 March 2024.
Summary
In conclusion, the Board remains confident in the future growth
prospects for the Group and will continue its progressive dividend
policy in 2024 and beyond. In the medium term it is anticipated that
the Group’s dividend will grow at least in line with Adjusted Diluted
EPRA Earnings per Share6.
David Hearn
Chairman
16 January 2024
ESG
Away from the financial results, I am pleased with the progress the
Group has made with its ESG strategy.
Even though Safestore already has one of the lowest environmental
impact profiles of any company within the overall property sector,
we have continued to focus on our environmental agenda, with
year-on-year reductions in greenhouse gas emissions and enhanced
disclosures in recognition of the recommendations of the TCFD. I am
pleased to report that we have retained a Silver rating in the 2023
EPRA sustainability awards, an ‘A’ rating for public disclosures by
GRESB, an ‘AA’ rating for ESG by MSCI and the highest rating of five
stars by Support the Goals.
In addition, we have demonstrated our commitment to our ESG
agenda by linking the margin on our £400 million bank facility to
ESG related KPIs agreed with our lending group. Details of these
achievements are covered more fully in the Chief Executive’s
statement and the sustainability section of our Annual Report.
Board changes
During the year, Ian Krieger, our Senior Independent Director and
Audit Committee Chair, has confirmed his intention to step down at
the 2024 AGM. I would like to thank Ian for his excellent contribution
over the last ten years. Jane Bentall will take over as Chair of the
Audit Committee.
I have also been pleased to welcome Avis Darzins to the Board
in the period. Avis has over 20 years of senior executive level and
management consulting experience in the retail, entertainment and
media sectors, specialising in customer experience, strategy and
business transformation and I look forward to working with her.
Finally, Andy Jones, our Chief Financial Officer, notified the Board
of his intention to retire from his role as Chief Financial Officer and
as a Director of the Company. Andy will continue in his role until the
transition to his successor is complete and an external search for
Andy’s replacement is underway. For over ten years, Andy has been
instrumental in helping deliver the Company's strategy, significantly
expanding its store portfolio and entering four additional geographies.
During his career with Safestore, he has overseen a period of sector
leading growth and shareholder returns and I’d like to thank Andy for
his outstanding contribution and to wish him well for the future.
Safestore Holdings plc | Annual report and financial statements 2023
7
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Chief Executive’s statement
“ After two years of outperformance in
which the Group delivered significant
revenue growth, 2023 has been a resilient
year in which significant strategic and
operational progress has been made.”
Frederic Vecchioli
Chief Executive Officer
has made significant strategic and operational progress.
The Group has delivered a resilient performance in 2023 and
In 2023, the Group delivered 0.8% growth in Adjusted
Diluted EPRA Earnings per Share, which, if calculated on
a like for like basis, grew by 3.3%. Total Group revenue
increased by 5.5% (4.8% CER1) with the UK up 2.1%, Paris up 3.5%,
Spain up 19.4%, the Netherlands up 100% and Belgium up 78.3%.
Resilient performances in the UK and Paris were complemented
by new store driven growth in Spain and the annualisation of our
ownership of the Netherlands and Belgium businesses. On a
like- for- like8 basis in CER1, Group revenue increased by 1.7% with the
UK up 1.2%, Paris up 3.5% and Spain flat. The Group’s like for like
average storage rate5 was up 5.0% at CER1 with average occupancy
down 3.3%, whilst like for like8 closing occupancy decreased by
3.2ppts to 79.6%.
The Group has traded solidly over the year despite strong comparable
performances in the record 2021 and 2022 financial years over which
c. 25% like for like revenue growth was delivered. Our digital marketing
platform has driven good enquiry generation and conversion despite a
slightly weaker overall market such that enquiry levels remain ahead of
the pre-Covid period.
The like-for-like average storage rate growth drove the UK revenue
performance and increased by 5.1% in the year whilst average
occupancy declined by 4.1% and closing occupancy was down
3.8ppts at 79.2%.
In Paris, our performance was resilient with like for like8 revenue
growing by 3.5% at CER1 driven by a like for like growth in average
storage rate of 3.9% with like for like average storage occupancy
broadly flat. Like for like8 closing occupancy ended the year at a
similar level to the prior year at 81.3% (FY2022: 81.7%). This is the 25th
consecutive year of revenue growth in Paris with average growth over
the last eight years of approximately 6.2%.
Our Spanish business saw flat like-for-like revenue for the year with
an increase in the like for like average storage rate of 7.4% offsetting
a decline in average occupancy of 7.4%, which reflects the impact of
opening new stores in catchment areas of existing stores increasing
overall revenue but impacting like for like occupancy. Ancillary sales
were also strong. Spain opened six stores in the year and now has
eleven stores open and a pipeline of a further five sites. Total revenue
growth was 19.4%.
Our Netherlands and Belgium businesses performed well in their
first full financial years as fully owned subsidiaries of the Group.
The businesses were not treated as like-for-like in the year but,
over the two quarters (Q3 and Q4) for which comparable revenue
figures are available, like for like growth would have been 11.0%
and 9.7% respectively.
8
Safestore Holdings plc | Annual report and financial statements 2023
The Group’s current pipeline of 30 new developments and store
extensions has been replenished over the last year and now constitutes
c. 1.5 million sq ft of future MLA (equivalent to 18% of the existing
portfolio) with associated outstanding capital expenditure of £128 million.
29 of the 30 projects are in London, Paris, Spain, the Randstad region of
the Netherlands and Brussels with just one in the UK outside of London,
in the South-East of England.
Group Underlying EBITDA2 of £142.2 million increased by 4.5% at
CER1 on the prior year. The Group’s Underlying EBITDA2 performance,
offset by a 9.6% increase in leasehold cost and a £5.0 million or 45.9%
increase in finance costs, resulted in a 0.8% increase in Adjusted Diluted
EPRA EPS6 in the period to 47.9 pence (FY2022: 47.5 pence). The
increase in finance costs was driven by higher debt levels to fund the
development pipeline and an increase in the marginal cost of borrowing.
On a like-for-like basis the increase in Adjusted Diluted EPRA EPS6 in the
period, as mentioned above, would have been 3.3%. Statutory operating
profit decreased by 55.2% to £230.4 million (FY2022: £514.5 million) as
a result of the gain on investment properties of £93.8 million being lower
than the record gain experienced in 2022 of £381.6 million.
Our property portfolio valuation, including investment properties under
construction, increased in the year by 9.3%, driven by the underlying
performance of the stores, new stores, acquisitions and exchange rate
movements. After exchange rate movements, the portfolio valuation
increased to £2,789.7 million with the UK portfolio up £118.6 million to a
total UK value of £1,934.0 million and the French portfolio increasing by
€50.8 million to €676.7 million.
Reflecting the Group’s dividend policy, the Board is pleased to recommend
a final dividend of 20.2 pence per share (FY2022: 20.4 pence) resulting in
a full year dividend up 1.0% to 30.1 pence per share (FY2022: 29.8 pence).
Over the last ten years, the Group has grown the annual dividend by
419% or 24.3 pence per share.
Outlook
We remain focused on further optimising the Group’s operational
performance and continuing to grow in all of our geographies. Our
development pipeline represents 18% of our existing MLA and our
balance sheet strength and flexibility provide us with the opportunity to
consider further selective development and acquisition opportunities in
all of our markets.
As disclosed in our 2023 half year results we expect the development
pipeline and associated financing to be dilutive to earnings in the
2024 financial year before becoming highly accretive in future years as
the stores stabilise. We believe that, on stabilisation, an incremental
£25–30 million of EBITDA will be added by the 30 projects in the pipeline.
For the first two months of the 2024 financial year, total Group revenue
is broadly flat with like-for-like revenue down 0.6% on the prior year.
Regionally, we have seen strong like-for-like growth in the Netherlands
and Belgium, solid improvements in Paris and Spain and a modest
decline in the UK.
Case study
We have made significant strategic progress during
the year having opened, acquired, or extended
thirteen stores (five in the UK, six in Spain and two
in Netherlands) adding over 500,000 sq ft of MLA
to the portfolio.
Our newest store in the Netherlands, MijnSafestore Amersfoort, opened in October
bringing the total number of stores in the country to eleven, with a pipeline of a further
four sites in the Randstad area. The new-build freehold site located to the east of
Amsterdam added 58,000 sq ft over three floors to the Safestore portfolio.
MijnSafestore Amersfoort was built using materials from sustainable sources including
recycled steel and concrete. The entire building is gas-free as the store does not
use gas for heating. This new store also provides bicycle parking alongside electric
vehicle charging points in the car park for customer and colleague use as part of our
commitment to responsible construction. In 2024, 30 solar panels will also be installed
on the roof of the building to reduce the self-consumption of electricity close to 0 kW.
We continue to leverage our effective and scalable operating platform to increase our
expansion plans across both the UK and continental Europe, and we remain on the
lookout for new freehold sites.
Further, in the first two months of the 2024 financial year, the Group
took limited promotional actions that resulted in year-on-year UK
like-for-like occupancy improving from -3.8ppts as at 31 October 2023
to -1.4ppts at 31 December 2023, and similarly from -0.4ppts to +0.3ppts
in Paris. The immediate impact on rates is expected to gradually reduce
over the next few months, particularly as the Group will annualise the
discounting activity that took place later last year in spring.
Whilst we are fully aware of the current macro-economic environment,
our business model has proven to be highly resilient with multiple
drivers of demand. We believe the Group is strongly positioned to
withstand pressures from challenging market conditions.
“ Over the last six months the Group has
opened or extended six new stores,
added a further five new developments
or extensions to the pipeline, extended
the leases on three stores, acquired the
freeholds of two stores, acquired an
existing store in the Netherlands and
entered the German market through
a new JV with Carlyle.”
Our strategy
The Group intends to continue to deliver on its proven strategy
of leveraging its well-located asset base, management expertise,
infrastructure, scale and balance sheet strength and further increase
its Earnings per Share by:
• optimising the trading performance of the existing portfolio;
• maintaining a strong and flexible capital structure; and
• taking advantage of selective portfolio management and expansion
opportunities in our existing markets and, if appropriate, in attractive
new geographies either through a Joint Venture14 or in our own right.
In addition, the Group’s strategy is pursued whilst maintaining a strong
focus on Environmental, Social and Governance (“ESG”) matters and
a summary of our ESG strategy is provided further on page 12.
Optimisation of existing portfolio
With the opening of 31 new stores since August 2016 in addition to
the acquisitions of 47 existing trading stores we have established and
strengthened our market-leading portfolio in the UK and Paris and
have entered the Spanish, Netherlands and Belgium markets.
Frederic Vecchioli
Chief Executive Officer
Capital expenditure
£235m
+13.8%
GHG emissions
-70%
since 2013
Safestore Holdings plc | Annual report and financial statements 2023
9
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Chief Executive’s statement continued
Optimisation of existing portfolio continued
We have a high quality, fully invested estate in all geographies and,
of our 190 stores as at 31 October 2023, 102 are in London and
the South East of England or in Paris, with 60 in the other major UK
cities and 28 in Barcelona and the Benelux region. In the UK, we now
operate 50 stores within the M25, which represents a higher number
of stores than any other competitor.
Our MLA4 has increased to 8.1 million sq ft at 31 October 2023
(FY2022: 7.7 million sq ft). At the current occupancy level of 77% we
have 1.9 million sq ft of fully invested unoccupied space (3.4 million
sq ft including the development pipeline), of which 1.2 million sq
ft is in our UK stores, 0.2 million sq ft is in Paris and 0.5 million sq
ft is in Barcelona and Benelux. In total, unlet space at our existing
stores is the equivalent of c. 47 empty stores located across the
estate and provides the Group with significant opportunity to grow
further. We have a proven track record of filling our vacant space
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 2023, occupancy of the stores in the portfolio in
2013 that remain in the Group today has increased from 63.1% to
80.7%, i.e. an average of 1.8ppts per year and equivalent to a total
of 0.9 million sq ft.
One of the key measures of operational success for a self storage
asset is the revenue per available square foot (“REVPAF”) and
Safestore’s priority will remain to maximise its leading REVPAF
with a sustainable combination of occupancy and rate. Between
the full financial years 2013 and 2023, the Company’s REVPAF has
maintained industry leading levels increasing 46.5% for the Group,
66.4% for the UK (60.5% for London and the South East; and 84.2%
for regional UK) and 32.1% for Paris.
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 the product
(source: SSA Annual Report 2023). In the UK, many of our new
customers are using self storage for the first time and it is largely a
brand-blind purchase. Typically, customers requiring storage start
their journey by conducting online research using generic keywords
in their locality (e.g., “storage in Borehamwood”, “self storage near
me”) which means that geographic coverage and search engine
prominence remain key competitive advantages.
We believe there is a clear benefit of scale in digital capability 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 43% enquiry growth for the Group over the last five years,
an annual growth of over 7%. 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.
Online marketing remains the predominant channel for customer
acquisition. Online enquiries made up 89% of all our enquiries
in the UK (FY2022: 90%), with 84% in France (FY2022: 85%).
10
Safestore Holdings plc | Annual report and financial statements 2023
The majority of our online enquiries now originate from a mobile
device highlighting the need for continual investment in our responsive
web platform for a ‘mobile-first’ world. We continue to invest in
activities that promote a strong search engine presence to grow
enquiry volume whilst managing efficiency in terms of overall cost per
enquiry and cost per new let. Group marketing costs for the full year
as a percentage of revenue were broadly in line with the previous year
at 3.8% (FY2022: 3.6%).
During 2023, the Group demonstrated its ability to integrate newly
developed and acquired stores into its marketing platform with
successful new openings in the UK (Morden, Wigan, Ellesmere
Port), Spain (Barcelona, Madrid) and the Netherlands (Apeldoorn,
Amersfoort). We have clearly demonstrated that our marketing
platform is transferable into multiple overseas geographies.
Motivated and effective store teams benefiting
from investment in training and development
Training, People and Performance Management
Our enthusiastic, well-trained, and customer-centric sales team
remains a key differentiator and a strength of our business.
Understanding the needs of our customers and using this knowledge
to develop trusted in-store 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 we passionately believe that our continued success
is dependent on our highly motivated and well-trained colleagues.
Following the award of a Bronze accreditation in 2015 and a Gold
accreditation in 2018, we were delighted to be awarded the “We invest
in people” Platinum accreditation in February 2021. This is the highest
accolade in the Investors in People scale and positions us as an
employer of choice. Shortly after our Platinum accreditation, we were
shortlisted for the Platinum Employer of the Year (250+) category in
the Investors in People Awards 2021. This further endorses the high
standard of our teams and the people development programmes that
drive our skill and talent retention.
We are committed to growing and rewarding our people and we tailor
our development, reward and recognition programmes to reflect
this. Our IIP recognised coaching programme, launched in 2018 and
upgraded every year since, continues to be a driving force behind
the continuous performance improvement demonstrated by our
store colleagues.
Our online learning portal, combined with the energy and flexibility
of our store colleagues, allows us to not only continue to deliver our
award-winning development programmes but also to capitalise on
the strength of our IT platforms. We have been able to combine our
technology communication skills with our tried and tested face-to-face
training sessions in a newly created “impact” sales refresher.
We have always aimed to recognise the changing needs and
demands of our customers. Combining new, along with tried and
tested, solutions and systems, we are further able to support our store
colleagues, allowing them to fulfil the needs of our customers over
and above that of our competitors. Our flexible contract types and
enhanced digital contract completion further enhance our customer
offer and experience.
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. Funded by the Apprenticeship Levy this programme
provides the opportunity to complete a Level 3 Management
and Leadership apprenticeship, with the additional opportunity
to complete an Institute of Leadership and Management (“ILM”)
qualification. In 2023, of the eleven delegates who successfully
completed the programme, ten of them did so with distinction.
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.
Further development opportunities are available through our Senior
Manager Development programme (“LEAD”) focusing on developing
our high performing Store Managers. This programme is aimed
at preparing candidates for more senior roles within the business
in addition to attaining a Level 5 Management and Leadership
apprenticeship. The relaunch of our graduate programme, in October
2022, provides an opportunity for newly qualified graduates to build
their skill set and experience resulting in a career with Safestore.
Our performance dashboard allows our store and field teams to focus
on the key operating metrics of the business providing an appropriate
level of management information to enable swift decision making.
Reporting performance down to individual colleague level enhances
our competitive approach to team and individual performance.
We continue to reward our people for their performance with
bonuses of up to 50% of basic salary based on their achievements
against individual targets for new lets, occupancy, and ancillary
sales. In addition, our Values and Behaviours framework is overlaid
on individuals’ performance in order to assess performance and
development needs on a quarterly basis.
Our “Make the Difference” people forum, launched in 2018, which is
a formal workplace advisory panel, enables frequent opportunities for
us to hear and respond to our colleagues. Our network of 15 “People
Champions” collect questions and feedback from their peers across
the business and put them to members of the Executive Committee.
We drive change and continuous improvement in responding to
the feedback we receive for “Our Business, Our Customers and
Our Colleagues”.
People Champions:
• consult and collect the views and suggestions of all colleagues that
they represent;
• engage in the bi-annual “Make the Difference” people forum, raising
and representing the views of their colleagues; and
• consult with and discuss feedback with management and the
leadership team at Safestore.
Our values are authentic, having been created by our people. They are
core to the employment life cycle and bring consistency to our culture.
Our leaders have high values alignment enabling us to make the right
decisions for our colleagues and our customers.
Our customers continue to be at the heart of everything we do,
whether it be in store, online or in their communities. Our commitment
to our customers mirrors that of our commitment to our colleagues.
Technological developments
After delivering the appropriate technology the Group recently opened
its first fully automated, unmanned, satellite self storage centre in
Christchurch shortly followed by its second in Eastleigh. Utilising
industry leading automated technology, along with in-house created
communication and control technologies, customers can securely
enter the building and their storage unit from a simple app on their
mobile phone. Several additional unmanned satellite stores are
currently under various stages of development in the UK.
Our customers also have the option to complete a booking and
contract for a self storage unit online for any UK store location. The
Group’s belief is that its multi-channel sales strategy, utilising full
automation, colleague interaction through our store sales teams or
our specialist call centre and our National Accounts team, provides
each type of customer with the most tailored and easy way to buy self
storage at Safestore.
Customer satisfaction
In February 2023, Safestore UK won the Feefo Platinum Trusted
Service award for the fourth year running. 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 rating for each of these three providers in the UK
is 4.8 out of 5. In France, Une Pièce en Plus uses Trustpilot to obtain
independent customer reviews with a “TrustScore” of 4.6 out of 5.
In Spain, OMB collects customer feedback via Google reviews and
has maintained a score of 4.8 out of 5.
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, from time to time, the ability to offer a Lowest Price
Guarantee in the event that a local competitor is offering a lower
price, or the ability to offer discretionary discounts. The Lowest Price
Guarantee and discretionary discount are centrally controlled and
activated on a store by store and unit by unit basis.
Average rates are predominantly influenced by:
• the store location and catchment area;
• the volume of enquiries generated online;
• the store team skills at converting these enquiries into new lets at
the expected price; and
• the very granular pricing policy and the confidence provided by
analytical capabilities and systems that smaller players might lack.
We believe that Safestore has a very strong proposition in each of
these areas.
Costs are managed centrally with a lean structure maintained at Head
Office. Enhancements to cost control are continually considered and
the cost base is challenged on an ongoing basis.
Strong and flexible capital structure
Since 2014 we have refinanced the business on seven occasions,
each time optimising our debt structure and improving terms, and
believe we have maintained a capital structure that is appropriate for our
business and which provides us with the flexibility to take advantage
of carefully evaluated development and acquisition opportunities.
At 31 October 2023, based on the current level of borrowings and
interest rates, the Group’s weighted average cost of debt, after
adjusting for capitalised interest costs, was 2.97% (FY2022: 2.23%).
The weighted average maturity of the Group’s drawn debt is 4.7 years
at the current period end and the Group’s LTV ratio is 25.4% as at
31 October 2023.
The Group has £528 million of fixed rate US Private Placement Notes
which constitute 72% of the total drawn debt. The tenors of the notes
are from 2024 to 2033 with €51 million of notes expiring in May 2024.
Safestore Holdings plc | Annual report and financial statements 2023
11
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Chief Executive’s statement continued
Strong and flexible capital structure continued
This LTV of 25.4% and the interest cover ratio of 6.7x for the
rolling twelve-month period ended 31 October 2023 provides us
with significant headroom compared to our banking covenants
(LTV of 60% and ICR of 2.4:1). The reduction in ICR12 reflects the
increased interest costs from funding the development pipeline.
We had c. £200 million of undrawn bank facilities at 31 October 2023
before taking into consideration the additional £100 million
uncommitted accordion facility.
Taking into account the improvements we have made in the performance
of the business, the Group is capable of generating free cash after
dividends sufficient to fund the building of three to four new stores
per annum depending on location and availability of land.
The Group evaluates development and acquisition opportunities in a
careful and disciplined manner against rigorous investment criteria.
Our investment policy requires certain Board-approved hurdle rates
to be considered achievable prior to progressing an investment
opportunity. In addition, the Group aims to maintain a Group LTV11
ratio below 40% which the Board considers to be appropriate for
the Group.
November 2022 refinancing
In November 2022, the Group completed the refinancing of its
Revolving Credit Facilities (“RCFs”) which were due to expire in
June 2023.
The previous £250 million Sterling and €70 million Euro secured
RCFs have been replaced with a single multi-currency unsecured
£400 million facility. In addition, a further £100 million uncommitted
accordion facility is incorporated into the facility agreement.
The facility is for a four-year term with two one-year extension options
exercisable after the first and second years of the agreement. The first
extension has recently been completed.
The Group pays interest at a margin of 1.25% plus SONIA or EURIBOR
depending on whether the borrowings are drawn in Sterling or Euros.
The margin is at the same level as the previous facility agreements.
Environmental, Social and Governance (“ESG”) KPIs have been
agreed with the Group’s lenders. The margin under the facility is now
linked to ESG targets, which could enable a reduction in the margin of
up to 5bps to 120bps.
A commitment fee of 35% of the margin is payable on undrawn
amounts under the facility. This has reduced from 40% under the
previous facility agreements.
Reflecting the Group’s improved credit profile, the banking group
and existing US Private Placement Noteholders have agreed that all
of the Group’s previously secured borrowings move to an unsecured
basis, thus reducing administrative and legal costs associated with
the facilities.
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 their 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).
12
Safestore Holdings plc | Annual report and financial statements 2023
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 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 FY2023.
Our people: Safestore was awarded the prestigious Investors in
People (“IIP”) Platinum accreditation and was in the final top ten
shortlist for Platinum Employer of the Year (250+) category in The
Investors in People Awards 2021. The Group’s response during the
pandemic lockdowns and aftermath has had a profound impact on
trust in leadership and colleague engagement and motivation.
Our customers: The Group’s brands continue to deliver a
high quality experience, from online enquiry to move-in. This is
reflected in customer satisfaction scores on independent review
platforms (Trustpilot, Feefo, Google) of over 90% in each market.
The introduction of digital contracts during the pandemic offers
both customer convenience and a reduction in printing, saving an
estimated 44,000 pieces of paper each month.
Our community: Safestore remains committed to being a
responsible business by making a positive contribution within the
local communities wherever our stores are based. We continue to
do this by developing brownfield sites and actively engaging with
local communities when we establish a new store, identifying and
implementing greener approaches in the way we build and operate
our stores, helping charities and communities to make better use
of limited space, and creating and sustaining local employment
opportunities directly and indirectly through the many small and
medium-sized enterprises which use our space. During FY2023,
the space occupied by local charities in 184 units across 104 stores
was 21,000 sq ft and worth £0.9 million.
Our environment: Safestore is committed to ensuring our
buildings are constructed responsibly and that their ongoing
operation has a minimal impact on local communities and the
environment. It should be noted that the self storage sector is not a
significant consumer of energy when compared with other real estate
sub-sectors. As a result, operational emissions intensity tends to
be far lower. According to a 2023 report by KPMG and EPRA, self
storage generates the lowest greenhouse gas emissions intensity
(4 kg/m2 for scope 1 and 2) of all European real estate sub-sectors.
Reflecting the considerable progress made on energy mix, efficiency
measures and waste reduction to date, Safestore’s emissions intensity
(3.4 kg/m2 in 2022) is considerably lower than the self storage sub-
sector average. In FY2023, the Group continued to progress with
a further 17% decline in absolute market-based emissions despite
continued portfolio growth. Emissions intensity has reduced 19%
to below 1.0 kgCO2e/m2. Per our commitments, our new stores in
the UK, Spain and the Netherlands have all achieved a minimum
energy performance rating of B. 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 34% compared to the level in FY2021 by 2025. The total investment
to achieve carbon neutrality should be around £3 million.
In addition to the IIP award and the customer satisfaction ratings, the
Group has received recognition for its sustainability progress and
disclosures in the last twelve months. Safestore has been given a
Silver rating in the 2023 EPRA Sustainability BPR Awards. The Global
ESG Benchmark for Real Assets (“GRESB”) has once again awarded
Safestore an “A” rating in its 2023 Public Disclosures assessment.
MSCI has awarded Safestore its second highest rating of “AA” for ESG
in 2023. The Group has also been awarded the highest rating of five
stars by “Support the Goals”.
Finally, the Group has worked with its banking lenders to agree
ESG related KPIs which are linked to the margin payable under its
new £400 million facility. Two KPIs have been agreed, which, when
achieved, result in a reduction in margin of up to 5bps.
Portfolio management
Our approach to store development and acquisitions in the UK, Paris
and Spain, and now the Netherlands and Belgium, continues to be
pragmatic, flexible and focused on the return on capital.
Our property teams 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 31 new stores including seven
in London, five in Paris, seven in Barcelona and Madrid, six in major
UK cities, four in UK conurbations and two in the Netherlands adding
1,446,000 sq ft of MLA.
In addition, the Group has acquired 47 existing stores through the
acquisitions of Space Maker, Alligator, Fort Box, Salus and Your
Room in the UK, OhMyBox! in Barcelona, the Lokabox and M3 group
from our Benelux JV acquisition and a store in Apeldoorn in the
Netherlands. These acquisitions added a further 1,890,000 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 twelve
stores across the portfolio adding a net 140,000 sq ft of fully invested
space to the estate. All of these stores are performing in line with or
ahead of their business plans.
Despite thirteen stores being opened, extended or acquired and
c. 500,000 sq ft of new MLA in the period, the Group’s current
pipeline of new developments and store extensions (see pipeline table)
has grown over the last year and now constitutes c. 1,454,000 sq
ft of future MLA. The pipeline is equivalent to c. 18% of the existing
portfolio. The outstanding capital expenditure of £128 million is
expected to be funded from the Group’s existing resources. The
total capital expenditure on stores opened in the 2022/23 financial
year to date as well as the outstanding pipeline is estimated to be
c. £251 million. Our industry leading level of REVPAF typically allows
us to deliver returns above our cash on cash hurdle of at least 10%.
Our current average portfolio Cash on Cash Return is 15%. On a 10%
return basis, a further £25–30 million of EBITDA will be generated at
stabilisation (c. four years after opening).
Property pipeline
Openings of new stores and extensions in the period:
Open 2023
FH/LH
MLA
Other
Redevelopments and Extensions
London- Crayford
London- Paddington Marble Arch
New Developments
London- Morden
Madrid- North
Madrid- South
Madrid- East
Barcelona- South
Barcelona- North
Barcelona- Central 3
Netherlands- Amersfoort
Wigan
Ellesmere Port
Total MLA
LH
LH
FH
FH
FH
FH
FH
FH
LH
FH
FH
FH
9,400
8,400
Extension
Extension
52,000
New build
53,000
Conversion
32,000
Conversion
50,000
Conversion
30,600
Conversion
42,000
Conversion
14,700
Conversion
58,000
New build
42,700
Conversion
55,000
New build
447,800
Open 2023 (post-year end)
FH/LH
MLA
Other
New Developments
Eastleigh
LH
14,000
Conversion,
Satellite
Lease extensions
During the period we completed the extensions of our leases at
Edinburgh-Fort Kinnaird, London- Charlton, London- Slough and
Burnley stores.
The Edinburgh lease has been extended by a further ten years to 2040.
At London- Charlton we have extended the lease term to 2038. In
doing so we have agreed a three-month rent-free period.
In Burnley we have also extended the lease to 2038 with tenant break
options every five years.
At London- Slough the lease was re-geared to extend by 15 years; the
total lease length at the end of the current financial year is 18 years.
As part of our ongoing asset management programme, we have now
extended the leases on 31 stores or 84% of our leased store portfolio
in the UK since 2012. As a result, since 2012 the remaining lease
length of our UK stores has remained at c. 11–13 years.
Freehold purchases
In Barcelona, the Group has been leasing its Valencia store since
2013. During the period, the freehold of the site was acquired
for €3.6 million.
In addition, the freehold of our Oldbury store in West Birmingham was
acquired for £5.7 million.
Safestore Holdings plc | Annual report and financial statements 2023
13
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Chief Executive’s statement continued
Property Pipeline Summary
Our pipeline of c. 1.5 million sq ft represents c. 18% of our existing property portfolio.
Opening 2024
FH/LH
Status*
MLA
Other
Redevelopments and Extensions
London- Holloway
Paris- Poissy
Paris- Pyrenees
New Developments
London- Paddington Park West
London- Lea Bridge
Paris- South Paris
Paris- West 3
Paris- East 1
Paris- North West 1
Paris- West 4
Madrid- South West
Madrid- South 2
Madrid- North East
Barcelona- Central 2
Randstad- Almere
Randstad- Aalsmeer
Randstad- Rotterdam
Opening 2025
New developments
London- Woodford
London- Walton
London- Watford
London- Wembley
Paris- West 1
Paris- La Défense
Randstad- Amsterdam
Brussels- Zaventem
Pamplona
Opening Beyond 2025
New developments
London- Old Kent Road
London- Bermondsey
London- Romford
Shoreham
FH
FH
LH
FH
FH
FH
FH
FH
FH
FH
FH
FH
FH
LH
FH
FH
FH
FH
FH
FH
FH
FH
FH
FH
FH
FH
FH
FH
FH
FH
C, STP
C, UC
C, UC
C, UC
C, UC
C, UC
C, UC
C, PG
C, PG
CE, PG
C, UC
C, UC
C, STP
C, PG
C, UC
C, UC
C, UC
C, PG
C, PG
CE, PG
C, STP
C, PG
C, UC
CE, PG
CE, PG
C, PG
C, STP
C, STP
C, STP
CE, PG
Total Pipeline MLA (let sq ft – million)
Total Outstanding CAPEX (£’m)
* C = completed, CE = contracts exchanged, STP = subject to planning, PG = planning granted, UC = under construction.
14
Safestore Holdings plc | Annual report and financial statements 2023
9,500
12,000
22,200
Extension
Extension
Extension
13,000
Conversion, Satellite
New build
New build
New build
Conversion
Conversion
New build
Conversion
Conversion
Conversion
Conversion
Conversion
New build
New build
New build
Conversion
New build
New build
New build
Mixed use facility
New build
New build
Conversion
New build
New build
New build
New build
80,900
55,000
58,000
60,000
54,000
53,000
46,800
68,800
57,000
20,400
44,500
48,400
71,000
68,700
20,700
46,750
49,000
56,000
44,000
61,400
47,400
64,500
76,500
50,000
41,000
54,000
c. 1.454
c. 128.0
Safestore’s initial investment in the Joint Venture was a c. €2.2 million
equity investment for a 10% share of the Joint Venture. Safestore
will also earn a fee for providing management services to the Joint
Venture. The Group expects to earn an initial return on investment
of c. 15% for the first full year before transaction related costs
reflecting its share of expected Joint Venture profits and fees for
management services.
Portfolio Summary
The self storage market has been growing consistently for over 20 years
across many European countries but few regions offer the unique
characteristics of London and Paris, both of which consist of large,
wealthy and densely populated markets. In the London region, the
population is 13 million inhabitants with a density of 5,200 inhabitants
per square mile, 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. 122 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.
Over the last four years the Group has expanded into further attractive,
under-penetrated markets in Spain, the Netherlands and Belgium with
a focus on the conurbations of Barcelona, Madrid, the Randstad area
and Brussels.
As at 31 October 2023, 97% of our Group revenue, 94% of our stores
and 95% of our available capacity are in London, Paris, South East
England, major UK cities, Spain, Amsterdam and the Randstad
area and Brussels. These major population areas deliver 97% of
the Group’s store EBITDA from 95% of our MLA, highlighting the
attractiveness of being present in these major cities and conurbations.
The current pipeline includes 30 further developments in these areas
which will increase the number of stores to 95% of our portfolio.
The pipeline of 1,454,000 sq ft of future MLA includes:
• ten projects with c. 456,000 sq ft of MLA in London (31% of the pipeline);
• one project with c. 54,000 sq ft of MLA in the South East of the UK
(4% of the pipeline);
• nine projects with c. 414,000 sq ft of MLA in Paris (29% of the pipeline);
• five projects with c. 258,000 sq ft of MLA in Spain (18% of the pipeline);
• four projects with c. 225,000 sq ft of MLA in the Netherlands (15%
of the pipeline); and
• one project in Belgium with c. 47,000 sq ft of MLA (3% of the pipeline).
Since our fourth quarter announcement in November 2023, three sites
have had planning granted. Of the 30 projects in the pipeline, only six
are now subject to planning.
Acquisitions
Acquisition of Apeldoorn self storage facility in the Netherlands
During the period, the Group completed the acquisition of
an existing 58,000 sq ft self storage facility in Apeldoorn in the
Netherlands. The store was operating under the Stoor brand and is
situated in an easily accessible commercial district on the north side
of the city, which has a population of 165,000.
New Joint Venture with Carlyle and investment in myStorage
in Germany
In December 2022 Safestore entered the German self storage
market via a new Joint Venture with Carlyle, which has acquired the
myStorage business.
Safestore has developed a multi-country highly scalable platform with
leading marketing and operational expertise in self storage, with a
proven track record for developing its platform in new markets.
The acquisition of myStorage represents an excellent opportunity to
develop our platform into the attractive German self storage market.
The Joint Venture builds upon our previous successful relationship
with Carlyle having entered the Benelux market in 2019. Our common
intention is to target development and acquisition opportunities
through the Joint Venture, providing the opportunity to achieve
operational scale and to develop local market knowledge, whilst also
retaining the option for Safestore to develop its own wholly owned self
storage sites in Germany. We look forward to continuing our working
relationship with Carlyle, and to developing a long and mutually
beneficial relationship.
The German market is one of Europe’s more under-penetrated
markets with just 0.21 sq ft of storage space per capita which
compares to 0.82 sq ft in the UK, 0.35 sq ft in France, 0.32 sq ft
in Spain, 0.50 sq ft in the Netherlands and 0.20 sq ft in Belgium.
According to the 2023 FEDESSA report, there are just 530 facilities
in Germany and 17.6 million sq ft of lettable space.
myStorage has seven medium to long term leasehold stores and
326,000 sq ft of MLA in Berlin, Heidelburg, Mannheim, Fürth,
Nuremburg, Neu-Ulm and Reutlingen.
Owned store portfolio by region
Number of Stores
Let Square Feet (m sq ft)
Maximum Lettable Area (m sq ft)
Average Let Square Feet per store (k sq ft)
Average Store Capacity (k sq ft)
Closing Occupancy (%)
Average Rate (£ per sq ft)
Revenue (£'m)
Average Revenue per Store (£'m)
UK
133
4.472
5.730
34
43
78.1%
30.25
166.5
1.25
France
29
1.107
1.360
38
47
81.3%
36.59
43.9
1.51
Spain
Netherlands
Belgium
11
0.135
0.340
12
31
39.5%
28.82
3.8
0.35
11
0.352
0.440
32
40
80.7%
16.20
6.4
0.58
6
0.164
0.220
27
37
74.1%
18.67
3.6
0.60
Group
Total
190
6.231
8.090
33
43
77.0%
30.26
224.2
1.18
Note:
The reported totals have not been adjusted for the impact of rounding.
Safestore Holdings plc | Annual report and financial statements 2023
15
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Chief Executive’s statement continued
Owned store portfolio by region continued
We have a strong position in both the UK and Paris markets, operating
133 stores in the UK, 73 of which are in London and the South East,
and 29 stores in Paris.
In the UK, 63% of our revenue is generated by our stores in London
and the South East. On average, our stores in London and the South
East are smaller than in the rest of the UK but the rental rates achieved
are materially higher, enabling these stores to typically achieve similar
or better margins than the larger stores. In London we operate 50 stores
within the M25, more than any other competitor.
In France, we have a leading position in the heart of the affluent
City of Paris market with ten 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.
In Spain the Group has eleven stores open in Barcelona and Madrid
with a further five stores in the pipeline in these two cities and in
Pamplona in the Basque Country, a region with a dynamic and
healthy economy.
In the Benelux Region the Group has eleven stores open in the
Netherlands and six in Belgium. The pipeline contains a further four
stores in the Netherlands and one in Belgium.
In addition, Safestore has the benefit of a leading national presence
in the UK outside of London where the stores are predominantly
located in the centre of key metropolitan areas such as Birmingham,
Manchester, Liverpool, Bristol, Newcastle, Glasgow and Edinburgh.
Market
The self storage market in the UK, France, Spain, the Netherlands
and Belgium remains relatively immature compared to geographies
such as the US and Australia. The SSA Annual Survey (May 2023)
confirmed that self storage capacity stands at 0.82 sq ft per head
of population in the UK. The most recent report relating to Europe
(FEDESSA’s 2023 report) showed that capacity in France is 0.35 sq ft
per capita. Whilst the Paris market density is greater than France, we
estimate it to be significantly lower than the UK at around 0.4 sq ft per
inhabitant. This compares with closer to 10 sq ft per inhabitant in the
US and 2 sq ft in Australia. In the UK, in order to reach the US density
of supply, it would require the addition of around another 17,000 stores
as compared to c. 1,500 currently. In the Paris region, it would require
around 2,400 new facilities versus c. 122 currently opened.
In Spain, the Netherlands and Belgium, geographies the Group
has recently entered, penetration is similarly low. In Spain capacity
is around 0.32 sq ft per head of population and the consumer is
serviced by just 585 stores. In the Netherlands penetration is 0.5 sq ft
per head of population (320 stores) and in Belgium 0.20 sq ft per head
of population (96 stores).
The Group recently entered a JV with Carlyle in Germany. The German
market is one of Europe’s more under-penetrated markets with just
0.21 sq ft of storage space per capita and, according to the 2023
FEDESSA report, there are just 530 facilities in the country and
17.4 million sq ft of lettable space.
Our interpretation of the most recent 2023 SSA report is that
operators remain optimistic about expansion and the future growth
of the industry. The level of development estimated for the next
three years is similar to that witnessed in recent years and we do
not consider this level of new supply growth to be of concern,
especially as we believe new supply helps to create increased
awareness of what is a relatively immature product on Europe.
16
Safestore Holdings plc | Annual report and financial statements 2023
We estimate new supply to represent around 2% to 3% of the
traditional self storage industry in the UK. These figures represent
gross openings and do not consider storage facilities closing or being
converted for alternative uses. We estimate that a small proportion of
these sites compete with existing Safestore stores.
New supply in London and Paris is likely to continue to be limited
in the short and medium term as a result of planning restrictions,
competition from a variety of other uses and the availability of
suitable land.
The supply in the UK market, according to the SSA Survey, remains
relatively fragmented despite a number of acquisitions in the sector in
recent years. The SSA’s estimates of the scale of the UK industry are
finessed each year and changes from one year to the next represent
improved data in addition to new supply. In the 2023 report the SSA
estimates that 2,231 self storage facilities exist in the UK market
including around 739 container-based operations. At the point in time
that the 2023 survey was written, Safestore is the industry leader by
number of stores with 129 wholly owned sites followed by Big Yellow
with 108 stores (including Armadillo), Access with 60 stores, Shurgard
with 41 stores, Lok’n Store with 40 stores, Storage King with 38 stores
and Ready Steady Store with 27 stores. In aggregate, the top seven
leading operators account for around 20% of the UK store portfolio.
The remaining c. 1,780 self storage outlets (including 739 container-
based operations) are independently owned in small chains or single
units. In total there are 1,086 storage brands operating in the UK.
Safestore’s French business, UPP, is mainly present in the core
wealthier and more densely populated inner Paris and first belt areas,
whereas our two main competitors, Shurgard and Homebox, have a
greater presence in the outskirts and second belt of Paris.
Our Spanish business currently operates in Barcelona and Madrid.
The metropolitan areas of Barcelona and Madrid have combined
growing high density populations of twelve million inhabitants and
significant barriers to entry.
Our focus in the Netherlands market is on the densely populated
Amsterdam and Randstad conurbations. The Netherlands is the
second most developed self storage market in Europe (after the UK)
but still remains under-penetrated with approximately 320 stores and
0.50 sq ft per capita of storage space.
Belgium is one of the more under-penetrated markets in Europe
with just 96 stores and 0.20 sq ft per capita of self storage space.
In Belgium our presence is focused on Brussels and the significant
urban conurbations of Liege, Charleroi and Nivelles.
Consumer awareness of self storage appears to be increasing but at a
relatively slow rate, providing an opportunity for future industry growth.
The SSA Survey indicates that approximately half of consumers have
low awareness about the service offered by self storage operators or
have not heard of self storage at all. Since 2014, this statistic has only
fallen 6ppts from 62%. Therefore, the opportunity to grow awareness,
combined with limited new industry supply, makes for an attractive
industry backdrop.
Self storage is a brand-blind product. 66% of respondents were
unable to name a self storage business in their local area (64% in
2022). The lack of relevance of brand in the process of purchasing
a self storage product emphasises the need for operators to have a
strong online presence. This requirement for a strong online presence
was also reiterated by the SSA Survey where 76% of those surveyed
(73% in 2022) confirmed that an internet search would be their chosen
means of finding a self storage unit to contact, whilst knowledge of a
physical location of a store as reason for enquiry was only c. 30% of
respondents (c. 26% in 2022).
There are numerous drivers of self storage growth. Most private and
business customers need storage either temporarily or permanently
for different reasons at any point in the economic cycle, resulting
in a market depth that is, in our view, the reason for its exceptional
resilience. The growth of the market is driven both by the fluctuation of
economic conditions, which has an impact on the mix of demand, and
by growing awareness of the product.
Safestore’s domestic customers’ need for storage is often driven by
life events such as births, marriages, bereavements and 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
Group
Paris
Spain
Benelux
Personal customers
Numbers (% of total)
Square feet occupied
(% of total)
Average Length of
Stay (months)
Business customers
Numbers (% of total)
Square feet occupied
(% of total)
Average Length of
Stay (months)
79%
77%
81%
90%
84%
61%
58%
64%
84%
76%
20.9
17.5
26.7
23.2
30.9
21%
23%
19%
10%
16%
39%
42%
36%
16%
24%
26.7
25.7
28.2
27.0
31.5
Safestore’s customer base is resilient and diverse and consists of
around 90,000 domestic, business and National Accounts customers
across London, Paris, Spain, major UK cities, 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 presence in major cities in the UK
is unsurpassed and contributes to the success of our industry
leading National Accounts business. In the UK, Safestore is the
leading operator by number of wholly owned stores. With 62% of
customers travelling for less than 15 minutes to their storage facility
(2023 SSA Survey), Safestore’s national store footprint represents a
competitive advantage.
The Group’s capital-efficient portfolio of 190 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 31 October 2023 of 12.4 years
(FY2022: 12.7 years). Although our property valuation for leaseholds
is conservatively based on future cash flows until the next contractual
lease renewal date, Safestore has a demonstrable track record of
successfully re-gearing leases several years before renewal whilst at
the same time achieving concessions from landlords.
In England, we benefit from the Landlord and Tenant Act that protects
our rights for renewal except in case of redevelopment. The vast
majority of our leasehold stores have building characteristics or
locations in retail parks that make current usage either the optimal
and best use of the property or the only one authorised by planning.
We observe that our landlords, who are property investors, value
the quality of Safestore as a tenant and typically prefer to extend the
length of the leases that they have in their portfolio, enabling Safestore
to maintain favourable terms.
In Paris, where 41% of stores are leaseholds, our leases typically
benefit from the well-enshrined Commercial Lease statute that
provides that tenants own the commercial property of the premises
and that they are entitled to renew their lease at a rent that is indexed
to the Indice des Loyers Commerciaux (Commercial Rental Index)
published by the state. Taking into account this context, the valuer
values the French leaseholds based on an indefinite property tenure,
similar to freeholds but at a significantly higher exit cap rate.
The Group believes there is an opportunity to leverage its highly
scalable marketing and operational expertise in new geographies
outside the UK and Paris. During 2019, a Joint Venture14 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 Venture14 added the Lokabox business, a
portfolio of six stores in Brussels (two), Liege (two), Charleroi and
Nivelles. In December 2020, the Joint Venture14 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 Venture14 owned by Carlyle in March 2022
and subsequently added a further two stores.
In 2019, the Group entered the Spanish market with the acquisition
of OhMyBox!. Our Spanish portfolio currently consists of eight stores
in Barcelona, and three Madrid stores. We have a further five stores
in our development pipeline situated in Madrid, Barcelona and
Pamplona. We consider these cities to have attractive characteristics
in relation to self storage and intend to continue to seek further
expansion opportunities.
In late 2022, Safestore entered the German self storage market via a
new Joint Venture15 with Carlyle, which has acquired the myStorage
business. myStorage has seven medium to long term leasehold stores
and 326,000 sq ft of MLA in Berlin, Heidelburg, Mannheim, Fürth,
Nuremburg, Neu-Ulm and Reutlingen.
Our experience is that being flexible in its approach has enabled
Safestore to operate from properties and in markets that would
have been otherwise unavailable and to generate strong cash-on-
cash returns.
Safestore excels in the generation of customer enquiries which
are received through a variety of channels including the internet,
telephone and “walk-ins”. In the early days of the industry, local
directories and store visibility were key drivers of enquiries. However,
the internet is now by far the dominant channel, accounting for 89%
(FY2022: 90%) of our enquiries in the UK and 84% (FY2022: 85%)
in France. This dynamic is a clear benefit to the leading national
operators that possess the budget and the management skills
necessary to generate a commanding presence in the major search
engines. Safestore has developed and continues to invest in a leading
digital marketing platform that has generated 43% enquiry growth
over the last five years.
Safestore Holdings plc | Annual report and financial statements 2023
17
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Chief Executive’s statement continued
Business Model continued
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 rating for each of these three providers in
the UK is 4.8 out of 5. In France, Une Pièce en Plus uses Trustpilot to
obtain independent customer reviews with 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 42% of our total
space let and have an average length of stay of 26 months. Within
our business customer category, our National Accounts business
represents around 487,000 sq ft of occupied space (around 8% of the
UK’s occupancy). Approximately two-thirds of the space occupied by
National Accounts customers is outside London, demonstrating the
importance and quality of our well-invested national estate.
The business now has in excess of c. 90,000 business and domestic
customers with an average length of stay of 27 months and 21
months respectively.
The cost base of the business is relatively fixed. Each store typically
employs three staff. Our Group Head Office comprises business
support functions such as Yield Management, Property, Marketing,
HR, IT and Finance.
With the establishment of a £400 million unsecured multi-currency
Revolving Credit Facility, Safestore has secure financing, a strong
balance sheet and significant covenant headroom. This provides the
Group with financial flexibility and the ability to grow organically and
via carefully selected new development or acquisition opportunities.
At 31 October 2023, we had 1.2 million sq ft of unoccupied space in
the UK, 0.2 million sq ft in France and 0.5 million sq ft in Spain and
Benelux, equivalent to c. 47 full new stores. Our continued 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
Trading Data – Total
Key Measures – Total
Revenue
UK (£’m)
Paris (€’m)
Spain (€’m)
Netherlands (€’m)
Belgium (€’m)
Underlying EBITDA
UK (£’m)
Paris (€’m)
Spain (€’m)
Netherlands (€’m)
Belgium (€’m)
Maximum Lettable Area (“MLA”)
UK (let sq ft – million)
Paris (let sq ft – million)
Spain (let sq ft – million)
Netherlands (let sq ft – million)
Belgium (let sq ft – million)
Closing Occupancy
UK (let sq ft – million)
Paris (let sq ft – million)
Spain (let sq ft – million)
Netherlands (let sq ft – million)
Belgium (let sq ft – million)
Closing Occupancy (% of MLA)
UK
Paris
Spain
Netherlands
Belgium
Average Rate
UK (£)
Paris (€)
Spain (€)
Netherlands (€)
Belgium (€)
REVPAF
UK (£)
Paris (€)
Spain (€)
Netherlands (€)
Belgium (€)
Year ended
31 October
2023
Year ended
31 October
2022
Change
166.5
50.5
4.3
7.2
4.1
106.2
35.0
1.2
3.6
1.4
5.730
1.360
0.340
0.440
0.220
4.473
1.107
0.135
0.352
0.164
163.0
48.8
2.1%
3.5%
3.6
19.4%
3.6 100.0%
2.3
78.3%
103.6
33.0
2.5%
6.1%
1.8 -33.3%
1.3 176.9%
0.9
55.6%
5.620
1.360
2.0%
0.0%
0.120 183.3%
0.380
0.220
15.8%
0.0%
4.637
1.112
0.095
0.298
0.175
-3.5%
-0.4%
42.1%
18.1%
-6.3%
78.1%
81.3%
39.5%
80.7%
74.1%
82.6% -4.5%
81.7% -0.4%
78.9% -39.4%
78.8%
1.9%
78.8% -4.7%
30.25
42.05
33.12
18.61
21.45
29.07
37.10
12.64
16.53
18.68
28.79
40.47
34.07
19.18
18.79
5.1%
3.9%
-2.8%
-3.0%
14.2%
29.02
35.81
0.2%
3.6%
29.78 -57.6%
16.20
17.43
2.0%
7.2%
18
Safestore Holdings plc | Annual report and financial statements 2023
64.1%
69.3%
44.4%
63.3%
67.6%
0.8%
1.7%
55.6% -11.2%
Spain
Since acquiring our Spanish business in 2019 we have opened a
further seven stores. We now have eleven open stores and a pipeline
of a further five stores in Madrid and Barcelona and one in Pamplona.
Trading Data – Like-For-Like
Key Measures – Like-For-Like
Year ended
31 October
2023
Year ended
31 October
2022
Change
Revenue
UK (£’m)
Paris (€’m)
Spain (€’m)
Underlying EBITDA
UK (£’m)
Paris (€’m)
Spain (€’m)
Underlying EBITDA Margin %
UK (%)
Paris (%)
Spain (%)
Closing Occupancy
UK (let sq ft – million)
Paris (let sq ft – million)
Spain (let sq ft – million)
Closing Occupancy (% of MLA)
UK
Paris
Spain
Average Occupancy
UK (let sq ft – million)
Paris (let sq ft – million)
Spain (let sq ft – million)
Average Rate
UK (£)
Paris (€)
Spain (€)
REVPAF
UK (£)
Paris (€)
Spain (€)
162.8
160.9
50.5
3.6
48.8
3.6
1.2%
3.5%
0.0%
104.3
35.0
1.6
101.9
33.0
2.4%
6.1%
2.0 -20.0%
4.392
1.107
0.084
4.587
1.112
0.093
-4.3%
-0.4%
-9.7%
79.2%
81.3%
77.9%
83.0% -3.8%
81.7% -0.4%
85.9% -8.0%
4.396
1.103
0.087
30.31
42.05
36.64
29.35
37.10
33.33
4.582
1.103
0.094
-4.1%
–0.0%
-7.4%
28.83
40.47
34.11
29.10
35.81
33.05
5.1%
3.9%
7.4%
0.9%
3.6%
0.8%
Details of trading operating KPIs are included in the tables above.
UK
UK revenue was up 2.1% for the year in total and 1.2% on a
like-for-like8 basis.
Demand, measured by enquiry levels, was down on the previous year
but ahead of pre-Covid levels.
We believe that our REVPAF10, a measure of how effectively we yield
manage our assets, is the strongest in the industry and materially
above some of our competitors. REVPAF10 grew by 0.9% for the year
on a like-for-like8 basis.
Like-for-like EBITDA2 grew by 2.4% with EBITDA margins improving
by 0.8ppts to 64.1% reflecting strong cost control in the business.
Like-for-like costs declined by 1.0% in the year.
Paris
Our Paris business did not experience the same surge in demand
that we saw in the UK during the Covid period but continued to
grow steadily.
Paris revenue grew 3.5% in total for the year on a total and like-for-like8
basis. Like-for-like8 revenue growth in the fourth quarter was 3.2%.
Our REVPAF10, which we believe is materially ahead of the local
competition, grew by a further 3.6% for the year.
Enquiry levels in Paris were marginally down compared to the same
period last year but ahead of pre-Covid levels.
Like-for-like EBITDA grew by 6.1% with EBITDA margins improving
by 1.7ppts to 64.1% reflecting tight cost control in the business.
Like-for-like costs reduced by 2% in the year.
Over the year our Spanish business grew revenue by 19.4% and
by 44.4% in the fourth quarter. Like-for-like8 revenue was flat
over the year.
In line with our expectations, like-for-like8 occupancy in Barcelona
has initially been diluted by the new Barcelona stores which have
opened in close proximity and within the same catchment area as an
existing store. Management believes that, given the limited supply in
central Barcelona, once the absorption phase has been passed, the
stores will generate higher revenue and profits and provide significant
long-term value.
Like-for-like EBITDA was broadly flat at store level but declined by
€0.4 million after professional fees.
Netherlands
Our Netherlands business, acquired on 30 March 2022, contributed
€7.2 million revenue for the year and €3.6 million of EBITDA.
During the year, a new store in Amersfoort has opened and an
additional store in Apeldoorn was acquired. We now have eleven
stores open in the Netherlands and a pipeline of a further four sites
located in the Randstad area.
The Netherlands business is not treated as like-for-like8 during the
2023 financial year. However, the stores that were in the Group
for the whole of the fourth quarter in 2022 delivered 10.7% growth
in Q4 2023.
Belgium
Our Belgium business, acquired with our Netherlands business on
30 March 2022, contributed €4.1 million revenue for the year and
€1.4 million of EBITDA.
We have six stores open in Belgium and a pipeline of one additional
site located in Brussels.
The Belgian business is not treated as like-for-like8 during the 2023
financial year. However, the stores that were in the Group for the whole
of the fourth quarter in 2022 delivered 10.0% growth in Q4 2023.
Frederic Vecchioli
Chief Executive
16 January 2024
Safestore Holdings plc | Annual report and financial statements 2023
19
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Financial review
“EPS1 has grown by 348%
over the last ten years.”
Andy Jones
Chief Financial Officer
T he table below sets out the Group’s underlying results of operations for the year ended 31 October 2023 and the year ended
31 October 2022. To calculate the underlying performance metrics, adjustments are made for the impact of exceptional items,
share-based payments, corporate transaction costs, change in fair value of derivatives, gain or loss on investment properties
and the associated tax impacts, as well as exceptional tax items and deferred tax. Although not superseding IFRS, management
considers this presentation of earnings 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.controllable by management, such as the revaluation of derivatives and investment properties,
and the impact of exceptional credits, costs and finance charges.
Revenue
Underlying costs
Share of associate’s Underlying EBITDA
Underlying EBITDA
Leasehold costs
Underlying EBITDA after leasehold costs
Depreciation
Finance charges
Share of associate’s finance charges
Underlying profit before tax
Current tax
Adjusted EPRA earnings
Share-based payments charge
EPRA basic earnings
Average shares in issue (m)
Diluted shares (for ADE EPS) (m)
Adjusted Diluted EPRA EPS1 (p)
2023
£’m
224.2
(82.0)
—
142.2
(14.9)
127.3
(1.3)
(15.9)
—
110.1
(5.1)
105.0
(3.5)
101.5
217.2
219.1
47.9
2022
£’m
212.5
(77.5)
0.1
135.1
(13.6)
121.5
(1.0)
(10.9)
(0.4)
109.2
(5.2)
104.0
(11.2)
92.8
210.9
218.9
47.5
Movement
%
5.5%
5.8%
(100.0%)
5.3%
9.6%
4.8%
30.0%
45.9%
(100.0%)
0.8%
(1.9%)
1.0%
(68.8%)
9.4%
0.8%
Note:
1
Adjusted EPRA earnings excludes share-based payment charges and, accordingly, the Underlying EBITDA, Underlying EBITDA after leasehold costs and underlying profit before tax
measures have been adjusted 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 previous table.
Statutory profit before tax
Adjusted for:
– Gain on investment properties and investment property under construction
– Change in fair value of derivatives
– Net exchange loss
– Share-based payments
– Exceptional items and other exceptional gains
– Exceptional finance income
Underlying profit before tax
20
Safestore Holdings plc | Annual report and financial statements 2023
2023
£’m
207.8
(102.6)
1.7
(0.3)
3.5
—
—
110.1
2022
£’m
498.8
(389.9)
0.3
—
11.2
(10.7)
(0.5)
109.2
Underlying EBITDA increased by 5.3% to £142.2 million (FY2022: £135.1 million), reflecting a 5.5% increase in revenue and a 5.8% increase to the
underlying cost base. This performance reflects the growth in average rate of 3.5% to £30.26 in 2023 from £29.25 in 2022 offset by a reduction
in occupancy of 5.1ppts to 77.0% in 2023 from 82.1% in 2022, whilst maintaining control over costs. Like for like revenue grew by 2.2% with the
like for like cost base broadly flat compared to 2022.
Leasehold costs increased by 9.6% from £13.6 million to £14.9 million, principally due to the impact of rent reviews across the portfolio in addition
to the Netherlands leaseholds now forming part of the Group.
Underlying finance charges increased by 45.9% from £10.9 million to £15.9 million. This principally reflects interest charges which increased
from £11.9 million in 2022 to £15.0 million in 2023 driven by higher debt levels and higher rates on borrowing to fund the Group’s acquisition and
development activity, offset by the gains made on financial instruments of £0.4 million in 2023 (FY2022: £1.3 million).
As a result, we achieved a 0.8% increase in underlying profit before tax of £110.1 million (FY2022: £109.2 million). The main movement in statutory
profit before tax in the year is the £287.3 million decrease in the gain on investment and development property to £102.6 million (FY 2022:
£389.9 million) partially offset by the reduction in the share-based payment charge of £7.7 million to £3.5 million (FY2022: £11.2 million).
Included within statutory profit before tax in 2022 were other exceptional gains of £10.7 million. £5.5 million related to the valuation gain of
Safestore’s 20% investment in the Joint Venture formed in 2019 with Carlyle that arose on acquisition of the remaining 80%, with £5.1 million
related to the profit on the sale of the Nanterre land in Paris in November 2021.
Given the Group’s REIT status in the UK, tax is normally only payable in France, Spain, the Netherlands and Belgium. The underlying tax charge
for the year was £5.1 million (FY2022: £5.2 million), calculated by applying the effective underlying tax rate of 22.5% to the respective underlying
profits earned by the non-UK businesses.
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 0.8% to 47.9 pence (FY2022: 47.5 pence).
Reconciliation of Underlying EBITDA
The table below reconciles the operating profit included in the income statement to Underlying EBITDA.
Statutory operating profit
Adjusted for:
– Gain on investment properties
– Share of associate’s Underlying EBITDA
– Depreciation
– Variable lease payments
– Share-based payments
Exceptional items:
– Costs incurred relating to corporate restructuring and exceptional taxation costs
Other exceptional gains:
– Profit on sale of land
– Profit on disposal of investment property
– Net gain on deemed disposal of investment in associate
Underlying EBITDA
2023
£’m
230.4
2022
£’m
514.5
(93.8)
(381.6)
—
1.3
0.8
3.5
—
—
—
—
0.4
1.0
0.3
11.2
0.1
(5.1)
(0.2)
(5.5)
142.2
135.1
The main reconciling items between statutory operating profit and Underlying EBITDA are the gain on investment properties as well as
adjustments for depreciation, variable lease payments, share-based payment charges, exceptional gains and the share of associate’s Underlying
EBITDA. The gain on investment properties was £93.8 million, as compared to £381.6 million in 2022 primarily due to the stable performance
of the stores over the period, against a period of outperformance in 2021 and 2022. The Group’s approach to the valuation of its investment
property portfolio at 31 October 2023 is discussed below.
Safestore Holdings plc | Annual report and financial statements 2023
21
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Financial review continued
Underlying profit by geographical region
The Group is organised and managed in four operating segments based on geographical region. The table below details the underlying
profitability of each region.
2023
2022
Revenue
Underlying cost of sales
Store EBITDA
Store EBITDA margin
Underlying EBITDA
EBITDA margin
LFL EBITDA margin
Leasehold costs
Spain
€’m
Benelux
€’m
UK
£’m
166.5
(51.1)
Paris
€’m
50.5
(12.1)
115.4
38.4
69.3% 76.0% 55.8% 55.8% 69.8%
Total
(CER)
£’m
222.7
(67.3)
11.3
(5.0)
6.3
155.4
n/a
(1.3)
70.7%
(14.2)
5.0
141.2
n/a
(0.3)
64.8%
(14.7)
4.7
126.5
4.3
(1.9)
2.4
(1.2)
1.2
(0.5)
0.7
106.2
35.0
63.8% 69.3% 27.9% 44.2% 63.4%
64.1% 69.3% 44.4%
(8.6)
(6.3)
UK
£’m
163.0
(48.2)
114.8
70.4%
70.3%
Paris
€’m
48.8
(12.2)
36.6
75.0%
75.0%
(11.2)
(3.6)
103.6
63.6%
63.3%
(8.0)
95.6
33.0
67.6%
67.6%
(5.9)
27.1
Spain
€’m
Benelux
€’m
Total (CER)
£’m
3.6
(1.2)
2.4
66.7%
75.0%
(0.6)
1.8
50.0%
55.6%
(0.5)
1.3
5.9
(2.5)
3.4
57.6%
n/a
(1.2)
2.2
37.3%
n/a
(0.1)
212.5
(61.7)
150.8
71.0%
71.3%
(15.8)
135.0
63.5%
64.1%
(13.6)
2.1
121.4
LFL store EBITDA margin
69.3% 76.0% 75.0%
Underlying administrative expenses
(9.2)
(3.4)
Underlying EBITDA after leasehold costs
97.6
28.7
EBITDA after leasehold costs margin
58.6% 56.8% 16.3% 41.6% 56.8%
58.7%
55.5%
36.1%
35.6%
57.1%
UK
£’m
Paris
£’m
Spain
£’m
Benelux
£’m
Total
£’m
Underlying EBITDA after leasehold
costs (CER)
Adjustment to actual exchange rate
Reported Underlying EBITDA after
leasehold costs
97.6
–
24.3
0.6
97.6
24.9
0.6
0.1
0.7
4.0
0.1
126.5
0.8
4.1
127.3
95.6
22.9
UK
£’m
95.6
—
Paris
£’m
22.9
—
Spain
£’m
Benelux
£’m
Total
£’m
1.1
—
1.1
1.8
—
121.4
—
1.8
121.4
Note:
CER is Constant Exchange Rate (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 £2.6 million, or 2.5%, to £106.2 million (FY2022: £103.6 million), underpinned by a 2.1% or £3.5 million
increase in revenue, which was driven by an increase in average rate of 5.1%, offset by a decrease in average occupancy of 3.3% and an increase
of 1.5% in the Underlying cost base, with like for like underlying costs decreasing 0.8%. The UK also reflected steady like for like revenue growth of
1.2%. The Underlying UK EBITDA margin was slightly up at 63.8% compared to 2022 at 63.6% whilst the like for like EBITDA margin saw a 0.8ppt
increase to 64.1% from 63.3% in 2022.
In Paris, Underlying EBITDA increased by €2.0 million, or 6.1%, to €35.0 million (FY2022: €33.0 million), reflecting a €1.7 million increase in revenue,
arising from a 3.9% increase in the average storage rate coupled with average occupancy remaining constant. The EBITDA after leasehold costs
margin in Paris increased from 55.5% in 2022 to 56.8% in 2023, reflecting the control over the underlying cost base of the portfolio, with a reduction
in underlying cost of sales of 0.8% and administrative costs of 5.6%, offset by underlying leasehold costs increasing by 6.8%. Underlying EBITDA
after leasehold rent in Paris increased by 5.9% to €28.7 million (FY2022: €27.1 million).
In Spain, revenue increased to €4.3 million (FY2022: €3.6 million), arising from the opening of six new stores and a 7.4% increase in like for like
average storage rate, offset by a decrease in like for like average occupancy of 7.4%. Underlying EBITDA decreased by €0.6 million to €1.2 million,
due to an increase in the underlying cost base and administrative expenses resulting from additional employment costs to support the new stores
as well as their dilutive impact whilst they achieve stabilisation.
On 30 March 2022, Safestore acquired the remaining 80% of the equity owned by Carlyle Europe Realty in the Joint Venture formed in 2019. The
Joint Venture was set up in 2019 to acquire and develop assets in the Netherlands and Belgium in order to leverage Safestore’s operating platform
outside our core markets. The contribution to revenue for the period was €11.3 million and €4.7 million EBITDA after leasehold costs. In 2022, the
businesses contributed seven months’ revenue, which equated to €5.9 million.
The combined results of the UK, Paris, Spain and Benelux delivered a 4.2% increase in Underlying EBITDA after leasehold costs at constant
exchange rates at Group level. Adjusting for a favourable exchange impact of £0.8 million, the combined results of the UK, Paris, Spain and Benelux
reported an Underlying EBITDA after leasehold costs increase of 4.9% or £5.9 million to £127.3 million (FY2022: £121.4 million).
22
Safestore Holdings plc | Annual report and financial statements 2023
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 2023 and 2022.
UK
Paris
Local currency
Paris in Sterling
Spain
Local currency
Spain in Sterling
Benelux
Local currency
Benelux in Sterling
Average exchange rate
Total revenue
£’m
€’m
£’m
€’m
£’m
€’m
£’m
£’m
2023
166.5
% of total
73%
50.5
43.9
4.3
3.8
11.3
10.0
1.149
224.2
20%
2%
5%
100%
2022
163.0
48.8
41.4
3.6
3.0
5.9
5.1
1.178
212.5
% of total
% change
76%
2.1%
19%
2%
3%
100%
3.5%
6.0%
19.4%
26.7%
91.5%
94.1%
2.5%
5.5%
The Group’s revenue increased by 5.5% or £11.7 million in the year. The average storage rate per sq ft for the Group was, at £30.26, 3.5% higher
than in 2022 (£29.25) offset by occupied space which was 86,000 sq ft lower at 31 October 2023 (6.231 million sq ft) than at 31 October 2022
(6.317 million sq ft).
Adjusting the Group’s revenue for the impact of new stores to a like-for-like basis, revenue has increased by 2.2%. Adjusting for the exchange
rate impact in the current year, Group like for like revenue at constant exchange rates has increased by 1.7%.
In the UK, revenue grew by £3.5 million or 2.1%, and on a like-for-like basis it increased by 1.2%. Occupancy was 164,000 sq ft lower at
31 October 2023 than at 31 October 2022, at 4.473 million sq ft (FY2022: 4.637 million sq ft). The average storage rate for the year grew 5.1%, from
£28.79 in 2022 to £30.25 in 2023. On a like for like basis, the average storage rate in the UK also increased by 5.1% to £30.31 (FY2022: £28.83).
In Paris, revenue grew by €1.7 million or 3.5% and on a like-for-like basis it increased by 3.5% to €50.52 million (FY2022: €48.76 million). This was
driven by an increase in the average storage rate of 3.9% to €42.05 for the year (FY2022: €40.47), with average occupancy being flat, with closing
occupancy decreasing to 1.107 million sq ft (FY2022: 1.112 million sq ft).
For Spain, revenue was €4.3 million (FY2022: €3.6 million), reflecting the growth in new stores, with like for like revenue being flat at €3.6 million.
On a like-for-like basis, average rate increased 6.1% to €36.64 (FY2022: €34.11), with a closing occupancy of 0.084 million sq ft (77.9% on a like-
for-like basis).
Our Netherlands and Belgium businesses, acquired on 30 March 2022 from the buyout of the remaining 80% of the equity owned by Carlyle in
the Joint Venture formed in 2019, contributed €11.3 million revenue (FY2022: €5.9 million, representing seven months’ revenue since acquisition
date). Collectively, the businesses saw 43,000 sq ft of occupancy inflows over the year and our Netherlands and Belgium businesses ended the
period with a closing occupancy of 78.5% (FY 2022: 78.8%). The average rate for the period was €18.61 and €21.45 for the Netherlands and
Belgium respectively (FY2022: €19.18 and €18.79 respectively for the seven-month period).
Safestore Holdings plc | Annual report and financial statements 2023
23
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Financial review continued
Analysis of cost base
Cost of sales
The table below details the key movements in cost of sales between 2022 and 2023.
Statutory cost of sales
Adjusted for:
– Depreciation
– Variable lease payments
Underlying cost of sales
Underlying cost of sales for FY2022
– New developments cost of sales
Underlying cost of sales for FY2022 (like-for-like)
– Volume related cost of sales
– Employee remuneration, recruitment and training
– Facilities and rates
– Enquiry generation
Underlying cost of sales for FY2023 (like-for-like; CER)
– New developments cost of sales
Underlying cost of sales for FY2023 (CER)
– Foreign exchange
Underlying cost of sales for FY2023
2023
£’m
(69.9)
1.3
0.8
(67.8)
2022
£’m
(63.0)
1.0
0.3
(61.7)
(61.7)
2.7
(59.0)
0.9
(1.1)
(1.4)
(0.5)
(61.1)
(6.2)
(67.3)
(0.5)
(67.8)
In order to arrive at underlying cost of sales, adjustments are made to remove the impact of depreciation, which does not form part of Underlying
EBITDA, and variable lease payments, which forms part of our leasehold costs in the presentation of our underlying income statement.
Underlying cost of sales increased by £6.1 million in the year, from £61.7 million in 2022 to £67.8 million in 2023. On a like-for-like basis and
at constant exchange rates, cost of sales increased by £2.1 million or 3.6%, with a £1.4 million increase in facilities and business rates due to
business rates reviews, and increases in utilities and store maintenance charges as well as a £1.1 million increase in employee costs offset
by a reduction in volume related costs of sales of £0.9 million. The investment in marketing during the year represented 3.8% of revenue
(FY2022: 3.6%).
Administrative expenses
The table below reconciles reported administrative expenses to underlying administrative expenses and details the key movements in underlying
administrative expenses between 2022 and 2023.
Statutory administrative expenses
Adjusted for:
– Share-based payments
– Exceptional items
Underlying administrative expenses
Underlying administrative expenses for FY2022
– New developments administration costs
Underlying administrative expenses for FY2022 (like-for-like)
– Employee related costs
– Professional fees and administration costs
Underlying administrative expenses for FY2023 (like-for-like; CER)
– New developments administration costs
Underlying administrative expenses for FY2023 (CER)
– Foreign exchange
Underlying administrative expenses for FY2023
24
Safestore Holdings plc | Annual report and financial statements 2023
2023
£’m
(17.7)
3.5
—
(14.2)
2022
£’m
(27.1)
11.2
0.1
(15.8)
(15.8)
1.1
(14.7)
2.7
(0.4)
(12.4)
(1.8)
(14.2)
—
(14.2)
In order to arrive at underlying administrative expenses, adjustments are made to remove the impact of exceptional items, share-based payments
and other non-underlying items.
Underlying administrative expenses decreased by £1.6 million in the year, from £15.8 million in 2022 to £14.2 million in 2023. Like-for-like
administrative expenses at constant exchange rates decreased by £2.3 million. This is the result of a reduction in expected variable employee
remuneration and other employee related costs.
Therefore, total underlying costs (cost of sales plus administrative expenses) on a like-for-like basis and at constant exchange rates have
remained relatively constant at £73.5 million (FY2022: £73.7 million).
Exceptional items and other exceptional gains
In 2022, included within exceptional items and other exceptional gains of £10.7 million are £5.5 million relating to the valuation gain of Safestore’s
20% investment in the Joint Venture and £5.1 million relating to the profit on the sale of the Nanterre land in Paris in November 2021.
In France, the basis on which property taxes have been assessed has been challenged by the tax authority for financial years 2011 onwards.
In November 2022 the French Supreme Court delivered a final judgement in respect of litigation for years 2011 to 2013, which resulted in a
partial success for the Group. The Group is separately pursuing litigation in respect of years since 2013 and has lodged an appeal with the
French administrative tribunal against the issues included in assessments for 2013 onwards on which it was ultimately unsuccessful in the French
Supreme Court for the earlier years. A provision is included in the consolidated financial accounts of £2.6 million at 31 October 2023 (31 October
2022: £2.4 million), to reflect the increased uncertainty surrounding the likelihood of a successful outcome. Of the total provided, £0.2 million has
been charged in relation to the year ended 31 October 2023 within cost of sales (Underlying EBITDA) (31 October 2022: £0.3 million within cost
of sales (Underlying EBITDA) and £1.9 million recorded as an exceptional charge in respect of financial years 2012 to 2020).
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 31 October 2023 is £3.0 million (31 October 2022: £3.0 million).
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.
Gain on investment properties
The gain on investment properties consists of the revaluation gains and losses with respect to investment properties under IAS 40 and the fair
value re-measurement of lease liabilities add-back and other items as detailed below.
Revaluation of investment properties
Revaluation of investment properties under construction
Fair value re-measurement of lease liabilities add-back
Statutory gain on investment properties
2023
£’m
103.5
(0.9)
(8.8)
93.8
2022
£’m
394.1
(4.2)
(8.3)
381.6
In the current financial year, the UK business contributed £75.8 million to the positive valuation movement, the Paris business contributed
£20.5 million and Benelux contributed £7.5 million. Spain showed a flat valuation movement over the period as the stores start to generate
income, growing towards stabilised occupancy. The gain on investment properties principally reflects the continuing progress in the performance
of the businesses, which has driven further positive changes in the cash flow metrics that are used to assess the value of the store portfolio
which are predominantly based on trading potential, underpinned by the average rate, which has increased by 3.5% to £30.26 in 2023 from
£29.25 in 2022, and capitalisation rates and stabilised occupancy which have remained constant at 5.72% and 89.33% respectively.
Operating profit
Operating profit decreased by £284.1 million from £514.5 million in 2022 to £230.4 million in 2023, comprising a £7.1 million increase in
Underlying EBITDA, a £287.8 million reduction in the gain on investment properties and investment properties under construction primarily due to
the stable performance of the stores over the period, against a period of outperformance in 2021 and 2022, and a reduction in the share-based
payments charge of £7.7 million, as well as the one-off other exceptional gains and exceptional items of £10.7 million in 2022.
Safestore Holdings plc | Annual report and financial statements 2023
25
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Financial review continued
Net finance costs
Net finance costs include interest payable, interest on lease liabilities, fair value movements on derivatives, exchange gains or losses, unwinding
of discounts and exceptional refinancing costs. Net finance costs increased by £6.9 million in 2023 to £22.6 million from £15.7 million in 2022,
principally due to the increased interest charges associated with borrowing to fund the Group’s acquisition and development activity and the
amortisation of debt issuance costs associated with the refinancing of the existing Revolving Credit Facility in November 2022, offset by the gains
made on financial instruments.
Net bank interest payable
Amortisation of debt issuance costs on bank loans
Interest from loan to associates
Financial instruments income
Other interest received
Underlying finance charges
Interest on lease liabilities
Fair value movement on derivatives
Net exchange gains
Exceptional finance income
Net finance costs
Net bank interest payable
Capitalised interest
Total interest paid
2023
£’m
(15.1)
(1.3)
—
0.4
(0.1)
(15.9)
(5.3)
(1.7)
0.3
—
(22.6)
15.1
4.4
19.5
2022
£’m
(11.9)
(0.5)
0.1
1.3
0.1
(10.9)
(5.0)
(0.3)
—
0.5
(15.7)
11.9
1.1
13.0
Underlying finance charge
The underlying finance charge (net bank interest payable reflecting term loan, swap and USPP interest costs) increased by £5.0 million to
£15.9 million, principally reflecting the increased interest charge associated with the Group’s additional borrowings in the year, drawn to fund the
Group’s acquisition and development activity and the amortisation of debt issuance costs associated with the refinancing. The underlying finance
charge represents the finance expense before exceptional items and changes in fair value of derivatives, amortisation of debt issuance costs and
interest on lease liabilities and is disclosed because management reviews and monitors performance of the business on this basis.
During the year, the Group capitalised interest of £4.4 million (FY2022: £1.1 million) associated with borrowings to fund the acquisition of
properties. Interest is capitalised from the point of acquiring the site until the store opens.
Financial instruments income in the year of £0.4 million (FY2022: £1.3 million) related to the gains made on the expiration of interest rate swaps
that matured in June 2023.
Based on the year-end drawn debt position the effective interest rate is analysed as follows:
UK Revolver – GBP drawn
UK Revolver – EUR drawn
UK Revolver – non-utilisation
US Private Placement 2024
US Private Placement 2026
US Private Placement 2026
US Private Placement 2027
US Private Placement 2028
US Private Placement 2028
US Private Placement 2029
US Private Placement 2029
US Private Placement 2029
US Private Placement 2031
US Private Placement 2033
Unamortised finance costs
Facility
£/€’m
£400.0
£197.0
€50.9
€70.0
£35.0
€74.1
£20.0
€29.0
£50.5
£30.0
€105.0
£80.0
€29.0
—
Drawn
£’m
£162.0
£41.0
—
£44.6
£61.1
£35.0
£64.6
£20.0
£25.3
£50.5
£30.0
£91.6
£80.0
£25.3
(£5.0)
Hedged
£’m
Hedged
%
—
—
—
£44.6
£61.1
£35.0
£64.6
£20.0
£25.3
£50.5
£30.0
£91.6
£80.0
£25.3
—
—
—
—
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
—
73%
Total
£927.8
£725.8
£527.8
Capitalised interest costs
Effective interest rate after capitalised
interest costs
26
Safestore Holdings plc | Annual report and financial statements 2023
Bank
margin
%
1.25%
1.25%
0.50%
1.59%
1.26%
2.59%
2.00%
1.96%
0.93%
2.92%
2.69%
2.45%
2.39%
1.42%
—
Hedged
rate
%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Floating
rate
%
5.19%
3.88%
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
rate
%
6.44%
5.13%
0.50%
1.59%
1.26%
2.59%
2.00%
1.96%
0.93%
2.92%
2.69%
2.45%
2.39%
1.42%
—
3.58%
(£4.4m)
2.97%
On 11 November 2022, the Group completed the refinancing of its RCFs which were due to expire in June 2023. The previous £250.0 million
Sterling and €70.0 million Euro RCFs were replaced with a single multi-currency £400 million facility. In addition, a further £100 million uncommitted
accordion facility is incorporated in the facility agreement. The facility is for a four-year term with two one-year extension options exercisable after
the first and second years of the agreement, with the first one-year extension being granted in October 2023.
The margin is at the same level as the previous facility agreements, with the Group paying interest at a margin of 1.25% plus SONIA or EURIBOR
depending on whether the borrowings are drawn in Sterling or Euros. This margin is now linked to ESG targets, which where met enable a
reduction in the margin of up to 5bps to 120bps.
As at 31 October 2023, £203.0 million of the £400.0 million UK Revolver was drawn as £162.0 million and €47.0 million (£41.0 million). The drawn
amounts attract a bank margin of 1.25%, and the Group pays a non-utilisation fee of 0.4375% on the undrawn balance of £197.0 million. The Group
had interest rate hedge agreements in place to June 2023, swapping SONIA on £55.0 million at a weighted average effective rate of 0.69%. Upon
maturity, the Group recognised a £0.4 million gain.
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
€50.9 million), 1.26% (on €70.0 million), 2.00% (on €74.1 million), 0.93% (on €29.0 million), 2.45% (on €105.0 million) and 1.42% (on €29.0 million)
respectively. The Euro denominated borrowings provide a natural hedge against the Group’s investment in the Paris and Spain businesses.
The 2026 (£35.0 million), 2028 (£20.0 million), 2029 (£50.5 million), 2029 (£30.0 million) and 2031 (£80.0 million) 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.
Predominantly, as a result of the fixed interest loan notes, effectively 73% of the Group’s drawn debt is at fixed rates of interest. Overall, the Group
has an effective interest rate on its borrowings of 3.58% as at 31 October 2023, compared with 2.41% at the previous year end. After adjusting
for capitalised interest costs the Group has an effective interest rate on its borrowings of 2.97%.
Non-underlying finance charge
Interest on lease liabilities was £5.3 million (FY2022: £5.0 million) and reflects part of the leasehold rent costs. 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 costs charge increased from £13.6 million in 2022 to £14.9 million in 2023, principally reflecting the increased rent costs across
the portfolio in addition to the Netherlands leaseholds now forming part of the Group.
The Group undertakes net investment hedge accounting for its Euro denominated loan notes.
Tax
The tax charge for the year is analysed below:
Tax charge
Underlying current tax
Current year – exceptional
Current tax charge
Tax on investment properties movement
Deferred tax asset
Other
Deferred tax charge
Net tax charge
2023
£’m
(5.1)
—
(5.1)
(8.3)
5.8
—
(2.5)
(7.6)
2022
£’m
(5.2)
(0.9)
(6.1)
(29.9)
—
0.1
(29.8)
(35.9)
The net income tax charge for the year is £7.6 million (FY2022: £35.9 million). In the UK, the Group is a REIT and benefits from a zero rate of tax
on its qualifying earnings. The underlying current tax charge relating to the European businesses amounted to £5.1 million (FY2022: £5.2 million),
calculated by applying the effective overall underlying tax rate of 22.5% to the underlying profits arising earned by the non-UK businesses.
The deferred tax charge relating to Paris, Spain and Benelux was £8.3 million (FY2022: £29.9 million).
A deferred tax asset of £5.8 million (FY2022: £nil) relates to the recognition of carried forward losses in the UK business, recognising the extent
to which the Group believes these losses will be utilised in future to reduce income tax liabilities.
In 2022, an exceptional current year tax charge of £0.9 million arose on the disposal of the Nanterre land.
All deferred tax movements are non-underlying.
Safestore Holdings plc | Annual report and financial statements 2023
27
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Financial review continued
Earnings per Share
As a result of the movements explained above, profit after tax for 2023 was £202.4 million as compared with £462.9 million in 2022. Basic EPS
was 93.1 pence (FY2022: 219.5 pence) and diluted EPS was 92.8 pence (FY2022: 212.4 pence).
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 is 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 provide a full reconciliation of
the differences in the financial year in which any Long Term Incentive Plan (“LTIP”) awards may vest.
Management introduced Adjusted Diluted EPRA EPS as a measure of EPS following the implementation of the Group’s LTIP schemes,
Management considers that the real cost to existing shareholders is the dilution that they will experience from the LTIP schemes; therefore,
earnings has been adjusted for the IFRS 2 share-based payment charge, and the number of shares used in the EPS calculation has been
adjusted for the dilutive effect of the LTIP scheme.
The Group has exposure to the movement in the Euro/Sterling exchange rate. Based on the FY2023 results, for every 10 cents variance to the
average exchange rate of 1.149, there would be an impact of £1.3 million to Adjusted EPRA Earnings.
Adjusted Diluted EPRA EPS for the year was 47.9 pence (FY2022: 47.5 pence), calculated on a pro forma basis, as if the dilutive LTIP shares
were in issue throughout both the current and prior years, as follows:
Basic earnings
Adjustments:
Gain on investment properties
Exceptional items
Other exceptional gains
Exceptional finance income
Net exchange loss
Change in fair value of derivatives
Tax on adjustments/exceptional tax
Adjusted
EPRA adjusted:
Fair value re-measurement of lease liabilities
add-back
Tax on lease liabilities add-back adjustment
EPRA basic EPS
Share-based payments charge
Dilutive shares
Adjusted Diluted EPRA EPS
Earnings
£’m
200.2
(93.8)
—
—
—
(0.3)
1.7
1.4
2023
Shares
million
217.2
—
—
—
—
—
—
—
Pence
per share
92.2
(43.2)
—
—
—
0.1
0.8
0.6
Earnings
£’m
462.9
(381.6)
0.1
(10.8)
(0.5)
—
0.3
29.7
2022
Shares
million
210.9
—
—
—
—
—
—
—
109.2
217.2
50.3
100.1
210.9
(8.8)
1.1
101.5
3.5
—
105.0
—
—
217.2
—
1.9
219.1
(4.1)
0.5
46.7
1.6
(0.4)
47.9
(8.3)
1.0
92.8
11.2
—
104.0
—
—
210.9
—
8.0
218.9
Pence
per share
219.5
(180.9)
—
(5.1)
(0.2)
—
0.1
14.1
47.5
(3.9)
0.5
44.1
5.3
(1.9)
47.5
Dividends
The Directors are recommending a final dividend of 20.2 pence (FY2022: 20.4 pence) which Shareholders will be asked to approve at the
Company’s Annual General Meeting on 13 March 2024. If approved by Shareholders, the final dividend will be payable on 9 April 2024 to
Shareholders on the register at close of business on 7 March 2024.
Reflective of the Group’s improved performance, the Group’s full year dividend of 30.1 pence is 1.0% up on the prior year dividend of 29.8 pence.
The Property Income Distribution (“PID”) element of the full year dividend is 17.62 pence (FY2022: 22.75 pence).
28
Safestore Holdings plc | Annual report and financial statements 2023
Property valuation and Net Asset Value (“NAV”)
Cushman & Wakefield Debenham Tie Leung Limited LLP (“C&W”) has valued the Group’s property portfolio. As at 31 October 2023, the total
value of the Group’s property portfolio was £2,681.1 million (excluding investment properties under construction of £108.6 million and net of lease
liabilities of £101.2 million). This represents an increase of £223.3 million compared with the £2,457.8 million valuation as at 31 October 2022.
A reconciliation of the movement is set out below:
Value at 1 November 2022
Currency translation movement
Additions
Reclassifications
Revaluation
UK
£’m
Paris
£’m
1,756.8
538.1
—
32.6
7.2
75.8
8.0
7.3
—
20.5
Value at 31 October 2023
1,872.4
573.9
Spain
£’m
27.3
0.5
12.1
30.6
(0.3)
70.2
Benelux
£’m
Total
£’m
Paris
€’m
135.6
2,457.8
625.9
1.7
15.6
4.2
7.5
10.2
67.6
42.0
103.5
—
8.4
—
23.6
164.6
2,681.1
657.9
Spain
€’m
31.9
—
13.9
35.2
(0.4)
80.6
Benelux
€’m
157.7
—
17.9
4.8
8.5
188.9
As described in note 13 of the financial statements, the valuation is based on a discounted cash flow of the net operating income over a ten-
year period and a notional sale of the asset at the end of the tenth year. Accordingly, the gain on investment properties principally reflects the
continuing progress in the performance of the business and the strong underlying trading of the store, underpinned by the average rate which
has increased by 3.5% to £30.26 in 2023 from £29.25 in 2022 with a reduction in occupancy, which is down 5.1ppts to 77.0% in 2023 from 82.1%
in 2022. The valuation assumptions for capitalisation rates and stabilised occupancy remained fairly constant, as explained further below.
The exchange rate at 31 October 2023 was €1.146:£1 compared with €1.163:£1 at 31 October 2022. This movement in the foreign exchange rate
has resulted in a £10.4 million favourable currency translation movement in the year. This has slightly improved the Group Net Asset Value ("NAV")
but had no impact on the loan-to-value ("LTV") covenant as the assets are tested in their functional currency.
The Group’s property portfolio valuation excluding investment properties under construction has increased by £223.3 million from the valuation
of £2,457.8 million at 31 October 2022. This reflects the gain on valuation of £103.5 million, which is explained above, £109.6 million relating to
additions, store refurbishments and reclassifications as well as £10.2 million of favourable foreign exchange movements on the translation of the
European portfolios. On a like for like basis the portfolio increased by 6.2%.
The value of the UK investment property portfolio including investment properties under construction has increased by £118.6 million (comprising
£115.6 million in investment properties and £3.0 million in investment properties under construction) compared with 31 October 2022. This
includes a £74.9 million valuation gain and £43.7 million of capital additions.
In Paris, the value of the property portfolio including investment properties under construction increased by €50.8 million, of which €23.6 million
was valuation gain and capital additions were €27.2 million. The net increase in investment properties, when translated into Sterling, amounted to
£52.2 million, reflecting the foreign exchange impact described above.
In Spain, the value of the property portfolio including investment properties under construction increased by €28.6 million, of which €29.0 million
were additions, with the valuation remaining flat over the period as the stores start to generate income, growing towards stabilised occupancy
where we would expect to see the benefits in the future. The net increase in investment properties including investment properties under
construction when translated into Sterling amounted to £17.3 million, reflecting the foreign exchange impact described above.
In Benelux, the value of the property portfolio including investment properties under construction was €208.7 million, representing an increase of
€44.5 million from 2022. This increase is predominantly made up of €36.0 million of additions as well as a €8.5 million valuation increase.
Our pipeline of future development opportunities remains strong and gives us further confidence in our future growth plans. The pipeline of c.
1.5 million sq ft representing c. 18% of our existing property portfolio is estimated, on stabilisation, to deliver in the range of £25–30 million of
incremental EBITDA.
The Group’s freehold exit yield for the valuation at 31 October 2023 reduced to 5.72%, from 5.78% at 31 October 2022, and the weighted
average annual discount rate for the whole portfolio has increased from 8.48% at 31 October 2022 to 8.54% at 31 October 2023.
C&W’s valuation report confirms that the properties have been valued individually but that if the portfolio were 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.
EPRA’s Best Practices Recommendations guidelines for Net Asset Value (“NAV”) metrics are EPRA Net Tangible Assets (“NTA”), EPRA Net
Reinstatement Value (“NRV”) and EPRA Net Disposal Value (“NDV”). Safestore considers EPRA NTA to be most consistent with the nature of the
Group’s business.
The EPRA Basic NTA per Share, as reconciled to IFRS net assets per share in note 15 of the financial statements, was 952 pence (FY2022: 908
pence) at 31 October 2023, up 4.7% since 31 October 2022, and the IFRS reported diluted NAV per share was 884 pence (FY2022: 820 pence),
reflecting a £153.6 million increase in reported net assets during the year.
Safestore Holdings plc | Annual report and financial statements 2023
29
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Financial review continued
Gearing and capital structure
As at 31 October 2023, the Group’s borrowings comprised bank borrowing facilities, made up of revolving facilities in the UK as well as US
Private Placements.
Net debt (including lease liabilities and cash) stood at £810.3 million at 31 October 2023, an increase of £112.0 million from the 2022 position
of £698.3 million, reflecting funding for the continued expansion of the Group portfolio. Total capital (net debt plus equity) increased from
£2,491.7 million at 31 October 2022 to £2,745.4 million at 31 October 2023. The net impact is that the gearing ratio has increased from 28.0% to
29.5% in the year.
Management also measures gearing with reference to its loan-to-value (“LTV”) ratio defined as net debt (excluding lease liabilities) as a proportion
of the valuation of investment properties and investment properties under construction (excluding lease liabilities). At 31 October 2023 the Group
LTV ratio was 25.4% as compared to 23.6% at 31 October 2022. The Board considers the current level of gearing is appropriate for the business
to enable the Group to increase returns on equity, maintain financial flexibility and achieve our medium term strategic objectives.
Borrowings at 31 October 2023
As at 31 October 2023, £203.0 million of the £400.0 million Revolver was drawn. Including the US Private Placement debt of €358.0 million
(£312.3 million) and £215.5 million, the Group’s borrowings totalled £730.8 million (after adjustment for unamortised finance costs).
As at 31 October 2023, the weighted average remaining term for the Group’s available borrowing facilities is 4.5 years (FY2022: 4.0 years). If we
take into consideration the second one-year extension available under the Revolving Credit Facility, the weighted average remaining term for the
Group’s available borrowing facilities is 5.0 years.
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 year ended 31 October 2023 is 6.7x (FY2022: 10.4x).
The LTV covenant is 60% under the current facility. As at 31 October 2023, there is significant headroom in both the UK LTV and the French LTV
covenant calculations.
The Group is in compliance with its covenants at 31 October 2023 and, based on forecast projections, is expected to be in compliance for a
period in excess of twelve months from the date of this report.
Cash flow
The table below sets out the underlying cash flow of the business in 2023 and 2022. For statutory reporting purposes, leasehold costs cash
flows are allocated between finance costs, principal repayments and variable lease payments. However, management considers a presentation
of cash flows that reflects leasehold costs as a single line item to be representative of the underlying cash flow performance of the business.
Underlying EBITDA
Working capital/exceptionals/other
Adjusted operating cash inflow
Interest payments
Leasehold rent payments
Tax payments
Free cash flow (before investing and financing activities)
Acquisition of subsidiary, net of cash acquired
Investment in associates
Capital expenditure – investment properties
Capital expenditure – property, plant and equipment
Net proceeds from disposal of land
Net proceeds from disposal of investment properties
Proceeds from disposal – property, plant and equipment
Net cash flow after investing activities
Issue of share capital
Dividends paid
Net drawdown of borrowings
Debt issuance costs
Financial instruments
Swap termination
Net (decrease)/increase in cash
Note:
Free cash flow is a non-GAAP measure, defined as cash flow before investing and financing activities but after leasehold rent payments.
30
Safestore Holdings plc | Annual report and financial statements 2023
2023
£’m
142.2
(13.0)
129.2
(19.6)
(14.9)
(5.5)
89.2
—
(2.3)
(119.0)
(2.9)
—
—
—
(35.0)
0.2
(65.9)
101.3
(4.9)
0.4
—
(3.9)
2022
£’m
135.1
(2.7)
132.4
(11.8)
(13.6)
(5.6)
101.4
(111.5)
(0.8)
(95.2)
(1.0)
—
6.4
0.2
(99.5)
0.5
(56.9)
132.1
(0.1)
1.3
0.5
(22.1)
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. The third table below reconciles adjusted operating cash inflow to the cash generated from
operations in the consolidated cash flow statement.
Free cash flow (before investing and financing activities)
Add back: principal payment of lease liabilities
Net cash flow from operating activities
From table above:
Adjusted net cash flow after investing activities
Add back: principal payment of lease liabilities
Net cash flow after investing activities
From consolidated cash flow:
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash flow after investing activities
Adjusted operating cash inflow
Cash outflow on variable lease payments
Cash flow from operations
2023
£’m
89.2
8.8
98.0
2023
£’m
(35.0)
8.8
(26.2)
98.0
(124.2)
(26.2)
2023
£’m
129.2
(0.8)
128.4
2022
£’m
101.4
8.4
109.8
2022
£’m
(99.5)
8.4
(91.1)
109.8
(200.9)
(91.1)
2022
£’m
132.4
(0.2)
132.2
Adjusted operating cash flow decreased by £3.2 million in the year. The movement in working capital is primarily associated with settlement of
employment related taxes connected with the maturity of the five and three-year share-based payment schemes at the end of 2022 and early
2023 respectively, and other trade receivable and payables timings. These are offset by the £7.1 million increase in Underlying EBITDA.
Free cash flow (before investing and financing activities) decreased by 12.0% to £89.2 million (FY2022: £101.4 million). The free cash flow
benefited from the increase in Underlying EBITDA which was offset by interest payments and working capital movements.
Investing activities experienced a net outflow of £124.2 million (FY2022: £200.9 million outflow), which included £123.4 million of capital expenditure
on our investment property portfolio. In 2022, the acquisition of the remaining 80% in the Joint Venture as well as the acquisition of the new site
at Christchurch resulted in an outflow of £111.5 million. Of the £123.4 million capital expenditure on investment properties, £43.3 million related
to the UK, £23.5 million related to France, £25.2 million related to Spain and £31.4 million related to Benelux. Of the £123.4 million, £6.7 million
related to maintenance, £95.4 million to new stores and £21.3 million to developments and property, plant and equipment.
Adjusted financing activities generated a net cash inflow of £31.1 million (FY2022: £77.4 million inflow). Dividend payments totalled £65.9 million
(FY2022: £56.9 million). The net drawdown of borrowings was £101.3 million (FY2022: £132.1 million), in order to finance the acquisition of
development and pipeline stores.
The strategic report, including pages 6 to 77, was approved by a duly authorised Committee of the Board of Directors on 16 January 2024
and signed on its behalf by:
Andy Jones
Chief Financial Officer
16 January 2024
Safestore Holdings plc | Annual report and financial statements 2023
31
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Engaging with our stakeholders
and our Section 172(1) statement
Our purpose: to add stakeholder value
by developing profitable and sustainable
spaces that allow individuals, businesses,
and local communities to thrive
Building and maintaining effective dialogue with stakeholders help inform the Board’s decision-making process and enable it to create value
in the long term. The Board emphasises the importance of continued engagement with our key stakeholders to management. Engagement is
led either directly through the Board and its Committees or by management. Not all information is reported directly to the Board, as the Board
delegates authority to the CEO and management for certain engagement and receives regular stakeholder updates at Board meetings.
Key stakeholders
How we engage
What they tell us matters to them
Our people
Our customers
Our
shareholders
and investors
We actively foster an open and
collaborative environment, whilst
prioritising the wellbeing and interest
of our colleagues. We engage with
our colleagues through a number of
mechanisms, including our ‘Make the
Difference’ people forum launched
in 2018 which is a formal workforce
advisory panel. Directors receive a
Health, Safety and Wellbeing report at
each Board meeting.
We engage with customers and
prospects in a creative and consistent
way across various communication
channels. We receive their feedback
through face-to-face communication
in store, directly through our
Customer Support Centre, and
online via our website, email, and
social media channels. We invest
in customer service training, tools,
coaching and evaluation to provide a
service that is professional, efficient,
and helpful.
• Cost of living
• Health and wellbeing and a safe
working environment
• Open and honest communication
• Training and development
opportunities
• Diversity and inclusion
• Reward and recognition initiatives
• Understanding their needs and
using our expertise to find them the
right solution
• Knowing that their belongings are
stored safely and securely
• Great customer service
• Reliable communications channels
• Flexibility
Safestore recognised the importance
of engaging with our investors
and shareholders and values the
input they have into the long term
success of the Company. Our
Chairman and SID are accessible to
shareholders and engage with our
largest institutional shareholders to
discuss governance, strategy and
other significant matters. Our CEO
and CFO regularly engage with all
shareholders and provide more
insight to the Company’s strategic
direction and performance.
• Appropriate remuneration structure
to drive growth and reward
performance, within the confines of
best practice
• Strong financial performance
and returns
• Clear strategy and transparency on
the Company’s performance
• Strong leadership and a strong
reputation for high standards of
business conduct
• Progress against our ESG targets
Outcomes and highlights from
engagement
The Company was pleased to receive
Platinum accreditation from Investors
in People. It continued to enhance
its colleague benefits and learning
and development opportunities.
The Safestore Diversity Pay Gap
Report was published and we will
continue to work together to deliver
a truly inclusive environment for
our colleagues.
Positive ratings on all relevant
customer service rating platforms:
• Feefo Platinum Trusted Service
award for Safestore UK
• Trustpilot ‘Excellent’ rating achieved
in the UK with a Trustpilot ‘Great’
rating maintained in France
• Average Google rating of 4.7
achieved in Spain
• In the Netherlands, a high score
of 4.9 was achieved on Trustpilot,
whilst in Belgium, customer service
was rated 4.7 on Feefo
The Board, through delegated
authority to its Remuneration
Committee, carried out two rounds
of extensive consultation and
engagement with shareholders
representing over 75% of our issued
share capital. The results of this
constructive two-way feedback with
shareholders was a 97.4% approval
of the 2023 Remuneration Policy at
the Company’s General Meeting held
in July 2023.
32
Safestore Holdings plc | Annual report and financial statements 2023
Key stakeholders
How we engage
What they tell us matters to them
Our partners
Our
communities
The Executive Team fosters strong
relationships with our business
partners, including Joint Venture
partners, our landlords at our
leasehold sites, our contractors and
our suppliers of goods and services.
Management holds regular meetings
with our JV Partners and quarterly
meetings with our construction
management partner and supplier
forums are held bi-annually to facilitate
an open exchange of feedback.
Location is fundamental to the
success of Safestore stores and
the Company is committed to
making a positive contribution to
our local communities.
We seek to deliver long term benefits
to our local communities and be part
of a thriving local economy.
Our Sustainable Development
Goals and sustainability strategy are
developed with our communities at
its heart.
• Building strong relationships
• Maintaining sustainable
business practices
• Our current and future financial
performance
• Our operational excellence
• Clear communication, fair
engagement and prompt payment
• Corporate governance
• Minimal negative impact and local
disruption to the community from
our business operations
• Creating local employment
opportunities, both directly and
from our suppliers and customers
• Supporting local community
projects and charities
Outcomes and highlights from
engagement
Following our previous successful JV
with Carlyle in the Benelux region,
we established a new German JV.
Germany is one of Europe's most
under-penetrated self storage
markets and this is the first stage of
growing Safestore’s presence there.
We provide fundraising support
to existing and new local charity
partners; for example, for the
eleventh year in a row, Safestore UK
teamed up with the WrapUp London
campaign to support its annual coat
drive to help those in need during the
winter of 2022 and during December
our Head Office colleagues supported
a collection for a local foodbank.
We continue to offer subsidised
storage space to local communities
through our ‘charity room in every
store’ scheme and actively seek
out practical and creative solutions
by working with and supporting a
number of charitable causes.
Safestore has a long-standing
commitment to provide both a long
term sustainable investment and
a pleasant and safe environment
for our customers, colleagues and
other stakeholders.
Our
environment
• We receive feedback from
• Green electricity used across the
various stakeholders on what
environmentally sustainable
business practices means to them.
Group with certification for the UK,
France, the Netherlands, and Spain
• 100% diversion from landfill for UK
• Awareness of the environmental
operational waste
impact of our activities and positive
actions to mitigate these.
• Reducing our carbon footprint by
decreasing absolute emissions,
energy usage, water consumption
and waste.
• 32 UK stores now have gas use
removed, reducing overall usage
year-on-year by 21%
• 7 new plug-in hybrid electric cars
have been purchased, replacing
petrol vehicles in the UK
Safestore Holdings plc | Annual report and financial statements 2023
33
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Engaging with our stakeholders
and our Section 172(1) statement continued
s172 statement
The Board believes that at all times, the Directors of the Company acted in a way that they considered, in good faith, would be most likely to
promote the success of the Company for the benefit of its members as a whole, and in doing so had regard to the matters set out in s172(1) (a)
to (f) (“s172 Matters”). In accordance with s414CZA of the Companies Act 2006, the below provides examples of principal decisions made during
the year and describes how the Directors had regard for the s172 Matters.
Principal decisions and how the Board had regard to the matters outlined in s172 (1) (a) to (f).
Background
Regard for s172 matters
Principal
decision
Remuneration
Policy
The Committee noted the significant vote against the
2022 Directors’ Remuneration Report with 74.66% of the
votes in favour of the report. This outcome was expected
by the Board given previous shareholder engagement
which indicated that some investors who voted against
the 2017 Remuneration Policy at its inception had a
policy to vote against all future remuneration reports that
disclosed the vesting value of the 2017 LTIP awards.
A number of those investors which voted against the
2022 Directors’ Remuneration Report noted that their
vote against did not reflect a vote against either the
management or the Board and that they accept fully that
the pay-outs reflect the outstanding value creation for all
shareholders over the five-year period from 2017 to 2022.
With the 2017 LTIPs vested, the Company was required
to put forward a suitable Remuneration Policy which
took into consideration the views of shareholders,
whilst understanding that the motivation and retention
of the Executive Directors and the senior management
team was considered by shareholders to be a critically
important challenge for the Board going forward.
Entering
German market
Safestore has developed a multi-country highly scalable
platform with leading marketing and operational expertise
in self storage, with a proven track record for developing
its platform in new markets.
Revolving
Credit Facility
Germany is one of Europe’s most under-penetrated self
storage markets. In December 2022, Safestore entered
the German self storage market via a new Joint Venture
with global investment firm Carlyle which acquired the
seven-store myStorage business with 326,000 sq ft
of MLA.
This followed our previous successful JV with Carlyle in
the Benelux region, of which Safestore subsequently took
full ownership in March 2022.
On 11 November 2022, the Group completed the
refinancing of its Revolving Credit Facilities, which were due
to expire in June 2023. These new facilities were integral to
Safestore’s growth ambitions, providing the Company with
the flexibility in financing it needs and providing sufficient
capital to draw from to facilitate expansion of the Company’s
portfolio. Following engagement and consultation with
various banks and the syndicate agent, the previous
£250.0 million Sterling and €70.0 million Euro RCFs were
replaced with a single, unsecured four-year £400 million
multi-currency facility, which was extended for a further year
to November 2027 in October 2023. In addition, a further
£100 million uncommitted accordion facility was established
with the lenders and incorporated in the facility agreement.
34
Safestore Holdings plc | Annual report and financial statements 2023
As part of the process undertaken by the Committee when
designing the Policy, it carried out an extensive consultation,
engaging with the Company’s largest shareholders representing
over 75% of the issued share capital, as well as investor bodies.
The Board, through delegated authority to its Remuneration
Committee, collated the feedback received and, from that,
understood that some areas of the proposals required further
consideration to ensure we are; aligned with shareholders’ interests;
acting fairly between members; and reflecting their priorities in
promoting the success of the company.
In particular, there was a desire across our shareholder base for the
Company to move to a more conventional remuneration structure
over the medium term, particularly with regard to the split between
base salary and LTIP to deliver upper quartile total remuneration for
exceptional performance.
The Board and shareholders share the belief that it is critical to the
business to appropriately incentivise and retain a strong management
team in order to continue to deliver value for shareholders.
The decision was taken to postpone the vote on the Remuneration
Policy at the 2023 Annual General Meeting and to undertake further
shareholder engagement and consultation on a revised proposal
which took into consideration shareholder sentiment to move to a
more conventional remuneration structure. In July 2023, the Board
gave notice for a General Meeting to seek approval of the revised
Remuneration Policy.
As a result of the extensive engagement and the Board’s ability
to not only take on Board shareholder feedback but to act upon
it, 97.4% of shareholders voted in favour of the Remuneration
Policy at the General Meeting. This could only be achieved through
constructive two-way feedback with shareholders and stakeholders.
The Board carefully considered the best interests of the Company,
for the benefit of its shareholders, when entering the German
market, as it does when entering any new territory.
The decision-making process was influenced by the success of the
JV with Carlyle in the Benelux region. However, the Board gave due
regard to the risk associated with entering a new jurisdiction. Local
advisers assisted in guiding management to better understand local
legislation, tax and reporting requirements, as well as cultural and
social considerations for the region.
The Board gave regard to how the transition of myStorage coming
under the Safestore Group would impact the existing workforce.
The Board considered how the new facility would contribute to the
long-term success of the Company, in particular its overall impact
on financial stability and strategic growth objectives. In assessing
the associated risk, the Board sought advice from management
and advisers and considered the terms and conditions of the facility,
including interest rates, financial covenants, and potential penalties,
and what the long term consequences of these could be. As part
of its process, the Board appointed Lazard as Financial Adviser,
and engaged and consulted with a number of lenders and the
syndicate agent to achieve the best terms available for the Group,
whilst ensuring appropriate due diligence had taken place and
governance processes were in place to mitigate risk and uphold
high business standards.
Principal risks
Strategic, operational and emerging risks are
considered at every business level and are
assessed, discussed and taken into account
when deciding upon future strategy, approving
transactions and monitoring performance.
Risks and risk management
The Board recognises that effective risk management requires
awareness and engagement at all levels of our organisation.
Risk management process
The Board is responsible for determining the nature of the risks the
Group faces, and for ensuring that appropriate mitigating actions
are in place to manage them in a manner that enables the Group to
achieve its strategic objectives.
Effective risk management requires awareness and engagement at all
levels of our organisation. It is for this reason that the risk management
process is incorporated into the day-to-day management of our
business, as well as being reflected in the Group’s core processes
and controls. The Board has defined the Group’s risk appetite and
oversees the risk management strategy and the effectiveness of the
Group’s internal control framework. Risks are considered at every
business level and are assessed, discussed and taken into account
when deciding upon future strategy, approving transactions and
monitoring performance.
Strategic risks are identified, assessed and managed by the Board, with
support from the Audit Committee, which in turn is supported by the
Risk Committee. Strategic risks are reviewed by the Audit Committee
to ensure they are valid and that they represent the key risks associated
with the current strategic direction of the Group. Operational risks are
identified, assessed and managed by the Risk Committee and Executive
Team members, and reported to the Board and the Audit Committee.
These risks cover all areas of the business, such as finance, operations,
investment, development and corporate risks.
The risk management process commences with rigorous risk
identification sessions incorporating contributions from functional
managers and Executive Team members.
The output is reviewed and discussed by the Risk Committee,
supported by members of senior management from across the business
and the recently introduced Internal Audit function. The Board,
supported by the Risk Committee, identifies and prioritises the top
business risks, with a focus on the identification of key strategic,
financial and operational risks. The potential impact and likelihood of
the risks occurring are determined, key risk mitigations are identified
and the current level of risk is assessed against the Board’s risk
appetite. These top business risks form the basis for the principal
risks and uncertainties detailed in the section below.
Principal risks and uncertainties
The principal risks and uncertainties described could have the
future potential to have the most significant effect on Safestore’s
strategic objectives.
The key strategic and operational risks are monitored by the Board
and are defined as those which could prevent us from achieving our
business goals. Our current strategic and operational risks and key
mitigating actions are as follows:
Risk
Current mitigation activities
Developments since 2022
Strategic risks
The Group develops business
plans based on a wide range of
variables. Incorrect assumptions
about the economic environment,
the self storage market, or changes
in the needs of customers or the
activities of customers may adversely
affect the returns achieved by the
Group, potentially resulting in loss
of shareholder value or loss of the
Group’s status as the UK’s largest
self storage provider.
• The strategy development process draws on
internal and external analysis of the self storage
market, emerging customer trends and a range
of other factors.
• Continuing focus on yield management with
regular review of demand levels and pricing at
each individual store.
• Continuing focus on building the Safestore brand,
acquisitions and development projects.
• The portfolio is geographically diversified with
performance monitoring covering the personal
and business customers by segments.
• Detailed and comprehensive sensitivity and
scenario modelling taking into consideration
variable assumptions.
• Monitoring of key data points helping to
understand and minimise uncertainty around
the economic environment.
• Robust cost management.
The Group’s strategy is regularly reviewed through
the annual planning and budgeting process, and
regular reforecasts are prepared during the year.
The Group expanded its interests in Europe
through a new Joint Venture with Carlyle, where
Safestore acquired a 10% share of the entity
which acquired the myStorage business.
The acquisition of new stores together with new
store openings have been fully integrated in the
Group’s store portfolio.
The current macroeconomic pressures arising
from both the supply chain issues associated
with the rebound in demand post global
restrictions and the conflict in Ukraine as well as
the cost-of-living increases have caused significant
global uncertainty and the impact this will have on
economic growth is unclear. Both pressures have
led to higher inflation which has had a direct impact
on consumer spending that may impact the self
storage market.
The level of risk is considered similar to the
31 October 2022 assessment.
Safestore Holdings plc | Annual report and financial statements 2023
35
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Principal risks continued
Risks and risk management continued
Principal risks and uncertainties continued
Risk
Current mitigation activities
Developments since 2022
Finance risk
Lack of funding resulting in an inability
to meet business plans or satisfy
liabilities or a breach of covenants.
• Funding requirements for business plans and the
timing for commitments are reviewed regularly as
part of the monthly management accounts.
In the past few years, there have been significant
opportunities to invest in new stores, in both the
UK and throughout Europe.
• The Group manages liquidity in accordance with
Board-approved policies designed to ensure
that the Group has adequate funds for its
ongoing needs.
• The Board regularly monitors financial covenant
ratios and headroom.
• All of the Group’s banking facilities now run to
30 November 2026. The US Private Placement
Notes mature between one and ten years.
The Group completed the refinancing of its
Revolving Credit Facilities (“RCFs”) which were due
to expire in June 2023. The previous £250 million
Sterling and €70 million Euro RCFs have been
replaced with a single multi-currency £400 million
facility. In addition, a further £100 million
uncommitted accordion facility is incorporated
in the facility agreement. The facility is for a four-
year term with two one-year extension options
exercisable after the first and second years of the
agreement, with the first extension recently being
completed.
The Group’s loan-to-value (“LTV”) ratio has broadly
remained constant during 2023, at c. 25.4%
compared to 23.6% at the prior financial year end.
Therefore, this risk continues to remain low and
broadly unchanged from the 31 October 2022
assessment.
Euro denominated borrowings continue to provide
an effective, natural hedge against the Euro
denominated net assets of our French and Spanish
businesses.
Although the Bank of England base rate has
increased, with 73% of the Group’s debt at fixed
rates, the Group’s exposure to interest rate shocks
is mitigated.
Although 73% of the Group’s debt is at fixed rates
at 31 October 2023, removing much of the volatility
of interest rate fluctuations, as we move into 2024
and fund the new store pipeline from incremental
drawings on our Revolving Credit Facility, we are
likely to see the cost of debt increase. Therefore,
this risk has increased from the 31 October 2022
assessment.
Treasury risk
Adverse currency or interest rate
movements could see the cost of debt
rise, or impact the Sterling value of
income flows or investments.
• Guidelines are set for our exposure to fixed and
floating interest rates and use of interest rate swaps
to manage this risk.
• Foreign currency denominated assets are
financed by borrowings in the same currency
where appropriate.
• The Group has entered into FX forwards to reduce
the volatility associated with the translation risk
of the Euro.
36
Safestore Holdings plc | Annual report and financial statements 2023
Risk
Current mitigation activities
Developments since 2022
Property investment and
development risk
Acquisition and development of
properties that fail to meet performance
expectations, overexposure to
developments within a short timeframe
or the inability to find and open new
stores may have an adverse impact on
the portfolio valuation, resulting in loss
of shareholder value.
• Thorough due diligence is conducted and detailed
analysis is undertaken prior to Board approval for
property investment and development.
• Execution of targeted acquisitions and disposals.
• The Group’s overall exposure to developments is
monitored and controlled, with projects phased
to avoid over-commitment.
• The performance of individual properties is
benchmarked against target returns and
post-investment reviews are undertaken.
Projects are not pursued when they fail to meet our
rigorous investment criteria, and post-investment
reviews indicate that sound and appropriate
investment decisions have been made.
The capital requirements of development
projects undertaken during the year have been
carefully forecasted and monitored, and we
continue to maintain significant capacity within
our financing arrangements.
We continue to pursue investment and
development opportunities, and consider our
recent track record to have been successful.
With the current economic uncertainty and
building cost inflation expected to peak in
2024, this risk is broadly unchanged from
the 31 October 2022 assessment.
Corporate transactions may be
at risk of competition referral
or post-transaction legal or
banking formalities.
Building cost inflation makes it difficult
to estimate accurate cost assumptions
when considering new investments
and developments.
Valuation risk
Value of our properties declining as
a result of external market or internal
management factors could result in a
breach of borrowing covenants.
In the absence of relevant
transactional evidence, valuations can
be inherently subjective leading to a
degree of uncertainty.
Occupancy risk
A potential loss of income and
increased vacancy due to falling
demand, oversupply or customer
default, which could also adversely
impact the portfolio valuation.
• Independent valuations are conducted regularly
by experienced, independent, professionally
qualified valuers.
• A diversified portfolio which is let to a large number
of customers helps to mitigate any negative impact
arising from changing conditions in the financial and
property markets.
• Headroom of LTV banking covenants is maintained
and reviewed.
• Current gearing levels provide sizeable headroom
on our portfolio valuation and mitigate the likelihood
of covenants being endangered.
The valuation of the Group’s portfolio has
continued to grow during the year, reflecting
valuation gains arising from the increasing
profitability of our portfolio, additions to our
portfolio through corporate acquisitions and the
opening of new development stores.
However, the pressures which have led to higher
inflation which in turn is having a direct impact on
consumer spending may impact the self storage
market. Therefore, the key assumptions that
underpin the investment property valuation are
subject to greater volatility.
This has resulted in the level of risk increasing
with respect to valuation risk compared to the
31 October 2022 assessment.
• Personal and business customers cover a wide
range of segments, sectors and geographic
territories with limited exposure to any
single customer.
• Dedicated support for enquiry capture.
• Weekly monitoring of occupancy levels and close
management of stores.
• Management of pricing to stimulate demand,
when appropriate.
• Monitoring of reasons for customers vacating and
exit interviews conducted.
• Independent feedback facility for customer experience.
• The like-for-like occupancy rate across the portfolio
has continued to grow partly due to flexibility offered
on deals by in-house marketing and the Customer
Support Centre.
The Covid-19 pandemic resulted in a contraction in
economic growth, with the economy recovering over
the period since. This coupled with the cost of living
crisis has led to higher inflation, resulting in higher
interest rates and a level of economic uncertainty.
With this economic outlook remaining uncertain,
with significant inflationary pressures on the
economy, and an associated impact on the cost of
living, this may lead to pressure on occupancy in
the next year.
Growth in our store portfolio diversifies the potential
impact of underperformance of an individual store
but does not fully mitigate the risk.
Therefore, the risk has increased compared
with the assessment for the year ended
31 October 2022.
Safestore Holdings plc | Annual report and financial statements 2023
37
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Principal risks continued
Risks and risk management continued
Principal risks and uncertainties continued
Risk
Current mitigation activities
Developments since 2022
Real estate investment
trust (“REIT”) risk
Failure to comply with the REIT
legislation could expose the Group
to potential tax penalties or loss of its
REIT status.
Catastrophic event
A major catastrophic event could
mean that the Group is unable to
carry out its business for a sustained
period or health and safety issues
put customers, staff or property at
risk. These may result in reputational
damage, injury or property damage,
or customer compensation, causing a
loss of market share and/or income.
Regulatory compliance risk
The regulatory landscape for UK
listed companies is constantly
developing and becoming more
demanding, with new reporting and
compliance requirements arising
frequently. Non-compliance with these
regulations can lead to penalties, fines
or reputational damage.
Changes in tax regimes could impact
tax expenditure.
The Group is also subject to the risk
of compulsory purchases of property,
which could result in a loss of income
and impact the portfolio valuation.
Marketing risk
Our marketing strategy is critical to
the success of the business. This
includes maintaining web leadership
and our relationship with Google.
A lack of effective strategy would
result in loss of income and market
share and adversely impact the
portfolio valuation.
• Internal monitoring procedures are in place to
ensure that the appropriate rules and legislation
are complied with and this is formally reported to
the Board.
The Group has remained compliant with all REIT
legislation throughout the year.
There has been no significant change to this risk
since the 31 October 2022 assessment.
• Business continuity plans are in place and tested.
• Back-up systems at offsite locations and remote
Continuing focus from the Risk Committee,
with particular attention to specific issues.
The level of risk is considered similar to the
31 October 2022 assessment.
working capabilities.
• Reviews and assessments are undertaken
periodically for enhancements to supplement
the existing compliant aspects of buildings
and processes.
• Monitoring and review by the Health and
Safety Committee.
• Robust operational procedures, including health
and safety policies, and a specific focus on fire
prevention and safety procedures.
• Fire risk assessments in stores.
• Periodic security review of all systems supported
by external monitoring and penetration testing.
• Limited retention of customer data.
• Online colleague training modules.
• Monitoring and review by the Risk Committee.
• Project-specific steering committees to address
the implementation of new regulatory requirements.
• Liaison with relevant authorities and
trade associations.
The framework of tax controls has been reviewed
during the year, ensuring key tax risks are in
line with the Group’s obligations. All regulatory
compliance risks have been monitored
during the year.
• Where a store is at risk of compulsory purchase,
contingency plans are developed.
The level of risk is considered similar to the
31 October 2022 assessment.
• Legal and professional advice.
• Online training modules.
• Constant measuring and monitoring of our web
presence and ensuring compliance with rules
and regulations.
We continue to build functional expertise at Group
level in performance marketing, organic and local
searches and analytics.
• Market leading website.
• Use of online techniques to drive brand visibility.
• Our pricing strategy monitors and adapts to
evolving customer behaviour.
The Group marketing forum continues to review
performance, market developments and our
ongoing improvement plan.
We have implemented a new value and quality
focused performance marketing strategy.
The level of risk is considered similar to the
31 October 2022 assessment.
38
Safestore Holdings plc | Annual report and financial statements 2023
Risk
Current mitigation activities
Developments since 2022
IT security/GDPR
Cyber-attacks and data security
breaches are becoming more
prominent with a greater level of
sophistication of attacks. This has
the potential to result in reputational
damage, fines or customer
compensation, causing a loss of
market share and income.
• Constant monitoring by the IT department and
consultation with specialist advice firms ensure
we have the most up-to-date security available.
• Twice yearly formal IT security review at Group
Audit Committee.
• We minimise the retention of customer and
colleague data in accordance with GDPR
best practice.
• The policies and procedures are under constant
review and benchmarked against industry best
practice. These policies also include defend,
detect and response policies.
During 2022 and continuing into 2023, the Group
continued to invest in digital security. Some of the
changes include more frequent penetration testing
of internet facing systems, adding components
such as anti-ransomware and the replacement
of components such as firewalls to the latest
technology and specification.
The risk is not considered to have increased for
the Group nor is the Group considered to be at
a greater risk than the wider industry; however,
we consider that digital threats on the whole
are increasing.
The level of risk is considered similar to the
31 October 2022 assessment.
Brand and reputational risk
Our reputation, with Safestore’s
growth and the increased awareness
of self storage, including increased
demand driving higher prices, may
potentially attract greater social media
attention and scrutiny.
• Constant involvement by the retail service team to
engage with customers and address their concerns.
The Retail Service function always engages with
customers to resolve any issues or complaints.
• Constant training of the store teams to provide
a clear and concise communication strategy
to customers.
• Our understanding of and engagement with all our
stakeholders enable early visibility and identification
of stakeholder dissatisfaction.
Our sustainability report on pages 44 to 77 of
our Annual Report provides insight into how we
engage with our customers and the community.
The level of risk is considered similar to the
31 October 2022 assessment.
• Large portfolio of potential new sites, prioritised
based on detailed research into areas most likely
to be successful.
• Strong operational knowledge and experience
in integrating new business.
• We have well-documented procedures for the
integration of new acquisitions and a good track
record of recent success.
The level of risk is considered similar to the
31 October 2022 assessment.
Geographical expansion
The Group has invested in expanding
the overseas operations of the
business through both subsidiaries
and the Joint Ventures with Carlyle
over recent years.
Suitable new sites may become more
difficult to find, with new sites failing
to achieve the required occupancy
and therefore deliver the required
sales and profitability within an
acceptable timeframe.
Integration of smaller acquisitions may
be challenging where the infrastructure
of the acquired business is not of
a level required by the Group.
Safestore Holdings plc | Annual report and financial statements 2023
39
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Principal risks continued
Risks and risk management continued
Principal risks and uncertainties continued
Risk
Current mitigation activities
Human resource risk
Fundamental to the Group’s
success are our people. As such,
due to market competitiveness
and cost-of-living increases we
are exposed to a risk of colleague
turnover, and subsequent loss of
key personnel and knowledge.
Climate change
related risk
The Group could be exposed to
climate change in the future through
the related transition and physical
risks. Physical risks could affect
the Group’s stores and may result
in higher maintenance, repair and
insurance costs.
Failing to transition to a low carbon
economy may cause an increase in
taxation, decrease in access to loan
facilities and reputational damage.
• The Group has an efficient, high performing
and stable management team in place. Our
retention strategy aims to ensure we achieve
long term engagement, through a combination
of motivating factors.
• We continue to consult regularly with our management
team and monitor involuntary turnover. We maintain
adequate succession for our key talent.
• The Board and Remuneration Committee regularly
review colleague feedback provided through
surveys, our workforce advisory panel and CEO
town hall events. These mechanisms enable
colleagues to raise questions, discuss wider
business issues and provide feedback on subjects
including wider workforce remuneration.
• In early 2021, Safestore received the Investors in
People Platinum Accreditation. This demonstrates
that our colleagues are happy, healthy, safe
and engaged in supporting Safestore to deliver
sustainable business performance.
• The good working order of our stores is of critical
importance to our business model with our standing
commitment to provide long term sustainable real
estate investment.
• Physical climate risk of new developments is
evaluated as part of the investment appraisal
process for new developments.
• We have a proactive maintenance programme in
place with a regular programme of store inspection,
with our maintenance teams following sustainable
principles and, wherever practicable, using
materials that have recycled content or are from
sustainable sources.
• If we choose to develop a store in a high risk area,
we proactively deploy flood mitigation measures.
• We are committed to building to a minimum
standard of BREEAM “Very Good” on all of our
new store developments.
• All new store developments are registered
with the Considerate Constructors Scheme,
which considers the public, the workforce and
the environment.
Location-based
Market-based
Group floor area (M sq. m)
10,000
)
s
e
n
n
o
T
(
e
2
O
C
l
a
n
o
i
t
a
r
e
p
o
l
a
t
o
T
8,000
6,000
4,000
2,000
0
Developments since 2022
The level of risk is considered similar to the
31 October 2022 assessment.
As part of our journey to enhance our disclosures
along the recommendations of the TCFD, the
Group is continuing to develop its understanding of
its exposure and vulnerability to climate change risk
and the direct impact on the business. The Group
has identified that the exposure and vulnerability
will be isolated to specific areas of the business,
such as a specific store potentially flooding rather
than a multiple store event, and therefore is limited.
Further, our Sustainability Committee, with
representation from across all levels of the
business, continues to assess the impact of
climate change related risks and is working with
the Board and its suppliers to develop an ambitious
plan to reduce carbon emissions, where the Group
has committed to be operationally carbon neutral
by 2035, requiring an investment to achieve carbon
neutrality of around £3 million.
Our investment appraisal process has been
updated to consider climate change related risks of
new investments and will continue to be evolved as
we continue on the TCFD journey.
As we start to fully understand the exposure to
the Group, as outlined in the TCFD statement,
we have a much clearer understanding of the risk.
Therefore, the level of risk is considered similar to
the 31 October 2022 assessment and will continue
to be assessed to determine whether this remains
a principal risk throughout the 2023/24
financial year.
1.2
1.0
0.8
0.6
0.4
0.2
0
)
m
.
q
s
M
(
a
e
r
a
r
o
o
fl
l
a
t
o
t
p
u
o
r
G
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
2021/22
(restated)
2022/23
40
Safestore Holdings plc | Annual report and financial statements 2023
Non-financial and sustainability information statement
We comply with the non-financial reporting requirements contained in Sections 414CA and 414CB of the Companies Act 2006. The below table,
and information it refers to, is intended to help stakeholders understand our position on key non-financial matters.
Reporting requirement
Some of our relevant policies
Where to read more about our policies
Environmental matters
Employees
Human rights
Social matters
• Code of conduct (page 86)
• Equality, diversity and inclusion
policy (page 49)
• Bullying and harassment policy
• Disciplinary and grievance policies
• Health and safety manual (page 50)
• Code of conduct (page 86)
• Equality, diversity and inclusion
policy (page 49)
• Data privacy policies
• Anti-slavery statement
• Whistleblowing (“Speak Out”)
policy (page 86)
• IT policy
The Company’s sustainability strategy has as one of its four pillars
to mitigate the environmental effects of its activities to reduce its
carbon footprint, improve recycling, reduce reliance on packaging,
minimise waste and improve efficiencies on finite natural resources
in all parts of the Company’s operations. How the Company
seeks to implement its sustainability strategy is set out in Our
Environment on pages 59 to 77 of the sustainability report.
The Company’s approach to environmental matters is overseen by
the Company’s sustainability leadership team.
The pivotal role of our colleagues is reported within the Our People
section of the sustainability report on pages 48 to 53 and within
the Chief Executive’s statement on pages 10 and 11.
Further commentary for individual policies is set out on the pages
as detailed in the previous column and/or on the Company’s
website. These policies are made available to all colleagues within
the Company’s Colleague Handbook, an internal document
available to all colleagues on the Company’s intranet.
The Company’s approach to pay fairness throughout the Group is
set out on pages 103 to 106 of the Directors’ remuneration report.
Further commentary for individual policies is set out on the
pages as detailed in the previous column and/or on the
Company’s website.
These policies are monitored as part of our risk management
processes, overseen by the Audit Committee.
The Company’s approach to social matters is set out in Our
Community on pages 56 to 58 of the sustainability report. The
Company’s approach to social matters is set out in the Company’s
Colleague Handbook and Operations Manual, which are internal
documents available to all colleagues on the Company’s intranet.
The Company’s approach to social matters is overseen by the
Company’s sustainability leadership team.
Anti-corruption and
anti-bribery
• Anti-corruption and bribery statement
and policy (page 86)
• Gifts, tips and hospitality
policy (page 86)
Further commentary for individual policies is set out on the pages
detailed in the previous column.
These policies are monitored as part of our risk management
processes, overseen by the Audit Committee.
Description of principal
risks and impact on
business activity
Description of the
business model
Non-financial key
performance indicators
• Risk overview (pages 35 to 40 of the
strategic report)
The Company’s approach to risk management and internal control
is set out in the governance report on page 85.
The Company’s market and business model are reported on pages
16 to 18 in the Chief Executive’s statement of the strategic report.
Non-financial KPIs are summarised in the Chief Executive’s
statement and reported in the financial highlights section of page
1, within the trading performance section of the strategic report on
pages 18 and 19; as well as in the sustainability report on page 44.
Certain Group policies and internal standards and guidelines are not published externally, but are available to all colleagues on the Company’s
intranet and publicly within the Governance section of the Company’s website.
Safestore Holdings plc | Annual report and financial statements 2023
41
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Viability statement
The Corporate Governance Code requires that the Directors have
considered the viability of the Group over an appropriate period of
time selected by them, declaring whether we believe Safestore can
continue to operate and meet its liabilities, taking into account its
current position and principal risks. The overriding aim is to encourage
Directors to focus on the longer term and be more actively involved
in risk management and internal controls. In assessing viability, the
Board considered a number of key factors, including our strategy (see
page 9), our business model (see pages 17 and 18), our risk appetite
and our principal risks and uncertainties (see pages 35 to 40 of the
strategic report).
The Board is required to assess the Company’s viability over a period
greater than twelve months, and in keeping with the way that the
Board views the development of our business over the long term a
period of three years is considered appropriate, and is consistent
with the timeframes incorporated into the Group’s strategic planning
cycle, with the review considering the Group’s cash flows, dividend
cover, REIT compliance, financial covenants and other key financial
performance metrics over the period. Our assessment of viability
therefore continues to align with this three-year outlook.
In assessing viability, the Directors considered the position presented
in the budget and three-year outlook recently approved by the Board.
In the context of the current environment, four plausible sensitivities
were applied to the plan, including a stress test scenario. These
were based on the potential financial impact of the Group’s principal
risks and uncertainties and the specific risks associated with the
recent pandemic and geopolitical pressures. These scenarios are
differentiated by the impact of demand and enquiry levels, average
rate growth and the level of cost savings, representing the assumption
variations, which can be summarised as follows:
• Base scenario - positive year-on-year enquiries and demand growth
in all countries;
• Upside scenario - representing stronger revenue growth than the
base scenario in the UK and France with some slight cost savings;
• Downside scenario - which assumes a decline in year-on-year
enquiries and demand in the UK and France; and
• Stress Test Scenario - representing 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.
In November 2022, the Group completed the refinancing of its
Revolving Credit Facilities (“RCFs”) which were due to expire in June
2023. The previous £250 million Sterling and €70 million Euro RCFs
have been replaced with a single multi-currency £400 million facility,
with a four-year term with extension options and an uncommitted
accordion facility incorporated in the facility agreement.
The impact of the above scenarios and sensitivities has been reviewed
against the Group’s projected cash flow position and financial
covenants over the three-year viability period. Should any of these
scenarios occur, clear mitigating actions are available to ensure that
the Group remains liquid and financially viable.
Such mitigating actions available include, but are not limited to,
reducing planned capital and marketing spend, pay and recruitment
measures, making technology and operating expenditure cuts and
utilisation of available headroom on existing debt facilities.
Further, the continued cost of living and the conflict in Ukraine have
resulted in significant pressure on the economic growth for the UK
and Europe in 2022–23. These potential implications have been
thoroughly considered with respect to the Group’s strategy through
the annual planning and budgeting process. They will continue to
be monitored through regular and periodic reforecasts and scenario
analysis over the next twelve months and align with the three-year
outlook of this review during the 2024 financial year.
The Audit Committee reviews the output of the viability assessment
in advance of final evaluation by the Board. The Directors have also
satisfied themselves that they have the evidence necessary to support
the statement in terms of the effectiveness of the internal control
environment in place to mitigate risk.
Having reviewed the current performance, forecasts, debt servicing
requirements, total facilities and risks, the Board has a reasonable
expectation that the Group has adequate resources to continue in
operation, meet its liabilities as they fall due, retain sufficient available
cash across all three years of the assessment period and not breach
any covenant under the debt facilities. The Board therefore has a
reasonable expectation that the Group will remain commercially
viable over the three-year period of assessment.
42
Safestore Holdings plc | Annual report and financial statements 2023
Compliance with Climate-related Financial Disclosures
We set out in the following section our climate-related financial disclosures consistent with the Task Force on Climate-related Financial
Disclosures (“TCFD”) recommendations and recommended disclosures. The Group has complied with the requirements of LR 9.8.6(8)R by
including climate-related financial disclosures consistent with the TCFD recommendations and recommended disclosures except for the
following matters: metrics and targets (b) Scope 3 emissions. For Scope 3 emissions, the Group currently discloses those aspects under its
operational control (categories 1, 3, 5 and 6). Upstream emissions associated with building development (category 2) may be material in a given
year and, whilst we are unable to quantify them at this stage, we engage with suppliers to ensure they are taking steps to reduce their impact
by using recycled content, reducing waste, minimising contractor travel, and using clean energy on site. Downstream emissions are primarily
customer journeys to and from our stores (category 9). These emissions will naturally abate as consumer vehicles switch to electric propulsion
powered by a clean energy grid.
The Group is not legally required to comply with the reporting requirements of the Companies Act 2006 as amended by the Companies
(Strategic Report) (Climate-related Financial Disclosure) Regulations 2022, as the Group did not meet the reporting criteria of this regulation
in 2022/23.
TCFD recommendation
Governance
Included in
FY2023 disclosures?
Reference/comment
a)
Describe the Board’s oversight of climate-related risks and opportunities
Yes
Strategic report page 59
b)
Describe management’s role in assessing and managing climate-related
risks and opportunities
Yes
Strategy
a)
b)
c)
Describe the climate-related risks and opportunities the organisation has
identified over the short, medium, and long term
Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning
Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario
Risk management
a)
Describe the organisation’s processes for identifying and assessing
climate-related risks
Yes
Yes
Yes
Yes
Corporate governance report page 78
Strategic report page 59
Strategic report pages 60 to 64
Strategic report pages 60 to 64
Strategic report pages 60 to 64
Strategic report page 60
b)
Describe the organisation’s processes for managing climate-related risks
Yes
Strategic report pages 35, 40 and 60
c)
Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organisation’s overall
risk management
Metrics and targets
Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its strategy
and risk management process
Yes
Yes
Strategic report pages 35 and 60
Strategic report pages 64 to 65
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse
gas (“GHG”) emissions, and the related risks
Yes, partial Scope 3
Strategic report (GHG reporting)
pages 70 to 77
Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets
Yes
Strategic report pages 47, 59,
62, 68 and 75
Safestore Holdings plc | Annual report and financial statements 2023
43
a)
b)
c)
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Strategic report
Sustainability
Our commitment to sustainability
“We are proud of our track record in developing
profitable and sustainable spaces that allow
individuals, businesses and local communities
to thrive.”
Frederic Vecchioli
Chief Executive Officer
Being a sustainable organisation is important to our
business processes and operations. We strive to ensure
that our activities reflect our ongoing commitment to
customer care, colleague engagement, responsible
supply chains, driving stakeholder value, and helping to
maintain a sustainable environment for future generations.
The Group continues to contribute to the development of a
sustainable society through focused efforts on the four pillars of our
sustainability strategy:
• creating a diverse, dynamic, and engaged workplace (‘our people’);
• commitment to customer care (‘our customers’);
• developing and maintaining partnerships with local communities
and charities (‘our community’); and
• mitigating the environmental effects of our activities
(‘our environment’).
Our sustainability focus
As a provider of self storage facilities across Western Europe, and the
UK’s largest self storage company, we are very aware of the impact
we can have in society and on the environment and therefore, by
making incremental changes year-on-year, we can ensure that our
actions have positive implications for our colleagues, suppliers, and
wider society.
We are continuously adapting our business to respond to our customers’
changing expectations including improving customer convenience, and
offering flexibility for small, medium, and large businesses.
We are proud of the role we continue to play in the lives of our
customers as we meet the demand for space from domestic and
business customers, and we want to keep pace with their needs
and expectations whilst delivering our commercial objectives.
Our sustainability strategy
Our material sustainability issues, as identified by internal and external
stakeholder engagement (with colleagues, investors, customers,
and partners), fall within four areas, which we call the ‘pillars’ of our
sustainability strategy: our people, our customers, our community,
and our environment. Although these ‘pillars’ do not fundamentally
change, we periodically review our activities to ensure we are focusing
clearly on material areas and are aligned with not only our corporate
goals but also the principles of the UN Global Compact. We track
progress against medium term targets set in 2019 using appropriate
key performance indicators (“KPIs”).
We report in accordance with the European Public Real Estate
Association’s (“EPRA’s”) latest recommendations: EPRA Sustainability
Best Practices Recommendations (“sBPR”), third version September
2017. These recommendations are also aligned with the latest Global
Reporting Initiative (“GRI”) standards.
Once finalised, these indicators and supplemental information
can be downloaded from the relevant section of our website:
www.safestore.co.uk/corporate/investors/report-and-presentations/.
44
Safestore Holdings plc | Annual report and financial statements 2023
Sustainability highlights
2023
we published our first diversity pay
gap report
4.5+
customer satisfaction rating in all markets
41%
reduction in accidents involving our
colleagues
32
gas appliances removed from UK stores
100%
of construction waste diverted away
from landfill in the UK
19.4%
reduction in market-based
operational GHG intensity
In recognition of the progress
made in our sustainability
disclosures, Safestore has been
awarded a Silver rating in the
2023 EPRA Sustainability BPR
Awards. In addition, the Global
ESG Benchmark for Real Assets
(“GRESB”) has once again
awarded Safestore an ‘A’ rating
in its 2023 Public Disclosures
assessment and MSCI has
awarded Safestore its second
highest rating of ‘AA’ for ESG.
Delivering our sustainability strategy
During the year, the Board continued to focus on delivering the
Group’s strategy whilst addressing the key environmental, social,
and ethical factors facing Safestore.
We continue to do this by:
• ensuring our colleagues are engaged and have the expertise
to deliver high quality customer service;
• developing long term relationships with local charities and
creating strong ties to the communities where we have a
storage centre;
• strengthening partnerships with our suppliers so we can
serve our customers better and grow our businesses together
going forward;
• managing the resources we use in order to minimise any negative
impact on the environment either through our direct operations
or through our sourcing activities; and
• maintaining our membership of the Self Storage Association
to further industry standards and codes of ethics for the benefit
of our customers.
Our purpose
To add stakeholder value by developing profitable and sustainable spaces
that allow individuals, businesses, and local communities to thrive
Read more on page 82
How we ensure sustainability
Our people
Provide a great place to work
Our customers
Deliver a great customer
experience and help customers
live and grow sustainably
Read more on page 47
Our community
Benefit local communities
Our environment
Protect the planet from our activities;
and manage risks to our business
from climate change
Our values
Our values, created by our store teams, are the foundation of everything we do
We love customers
We lead the way
We have
great people
We dare to
be different
We get it
Read more on page 53
Safestore Holdings plc | Annual report and financial statements 2023
45
OVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT Sustainability continued
Our commitment to sustainability continued
Alignment to the UN Sustainable
Development Goals
As a Group, we continue to align our sustainability priorities with
the United Nations Sustainable Development Goals (“SDGs”) so
that our actions can contribute to a more significant, shared impact.
By actively pursuing our business objectives, we are addressing a
wide spectrum of societal challenges, which include issues like climate
change, fostering decent work and economic growth, and promoting
responsible consumption and production.
The SDGs or Global Goals are a call to action for stakeholders
worldwide to come together and address the environmental,
economic, and social disparities that affect global populations
and society.
Achieving these goals necessitates the support and collaboration of
governments, businesses, and individuals. As the role that businesses
must play becomes apparent, the SDGs are becoming an increasingly
important tool for assessing the impact of companies on society.
Our stakeholders, including investors, customers, and current or
prospective colleagues, are increasingly looking to us to demonstrate
our contributions to the SDGs. Safestore is now part of a growing
cohort of global organisations committed to advancing the SDGs.
We remain focused on directing our efforts towards the priority areas
where we can make a meaningful impact.
These are:
• Goal 8: Decent work and economic growth
• Goal 11: Sustainable cities and communities
• Goal 12: Responsible consumption and production
• Goal 13: Climate action
Sustainability governance
Sustainability is embedded into the day-to-day responsibilities at
Safestore and, accordingly, we have opted for a governance structure
which reflects this. Three members of the Executive Team co-chair a
cross-functional sustainability group consisting of the functional leads
responsible for each area of the business. The Group reports on its
activities directly to the Board.
Our suppliers
We recognise the pivotal role played by our suppliers in our
sustainability journey, and we expect them to act ethically, and share
in our commitments to maintain sustainable business practices.
We strive to engage and work in partnership with our suppliers in a
collaborative effort to align our operations with the United Nations
Sustainable Development Goals (“SDGs”) in order to achieve our
sustainable goals by 2030 (SDG 17: Partnership for the goals).
PLC Board
HR Director
Executive sponsor
Marketing Director
Executive sponsor
Property Director
Executive sponsor
Sustainability group
Property/
construction
Functional lead
Operations
Functional lead
Customer
marketing
Functional lead
Risk
Functional lead
HR
Functional lead
In 2023, we are proud to have maintained
the highest rating of five stars by Support
the Goals, a global initiative that rates and
recognises businesses that support the
United Nations Global Goals. This rating is
awarded to businesses which are publicly
engaging suppliers in the pursuit of these
global objectives.
Given that a significant amount of our environmental impact comes
from our third party suppliers, we have dedicated substantial effort
to ensure a consistent evaluation of our supply chain with respect to
internationally recognised Environmental, Social, and Governance
(“ESG”) standards. We collaborate with our suppliers and business
associates as we work together towards achieving the SDGs most
pertinent to our business.
As a Group, our focus remains on:
• creating decent workplaces in our pursuit of establishing equitable
and respectful workplaces where our colleagues are treated fairly;
• conducting business ethically and lawfully ensuring that our
operations are conducted with integrity; and
• responsible sourcing, consumption, and production practices that
align with our sustainability principles. Specifically, we work with our
construction partners to ensure the development of our stores has
a minimal impact on the environment and our local communities.
For more details on our sustainable construction standards and
Considerate Constructors Scheme (“CCS”) see page 69.
As we are only as strong as our weakest supplier, our intention is to
continue to demonstrate our commitment, actions, and progress
towards the SDGs, and encourage our suppliers to work towards
achieving similar goals as we head towards a more sustainable and
inclusive future.
46
Safestore Holdings plc | Annual report and financial statements 2023
Sustainability targets and KPIs
The table below outlines the targets we set ourselves in each of the four ‘pillar’ areas. We are pleased to have met the majority of the 2022
targets set in 2019 and our near term focus now shifts to the 2025 targets. In consideration of our plan to achieve operational net zero according
to the market-based method for Scope 2, and the acquisition of store portfolios in the Benelux, the 2025 emissions targets have been revised
this year.
Sustainability
strategy ‘pillar’
Sustainable
business goals
Corporate
business
goals
UN Sustainable
Development Goals
Performance
measures (“KPIs”)
Targets
2025
2028
A fair place to work
Median gender pay gap
Below UK
median
Below UK
median
Our
people
A safe working
environment
Deliver a great
customer experience
Our
customers
Help customers live
and grow sustainably
A great
place
to work
Storage
provider
of choice
Engagement score
Maintain score >80%
Number of reportable
injuries (RIDDOR)
Investors in People
Zero
Zero
Maintain IIP
Platinum
Maintain IIP
Platinum
Customer
satisfaction score
>4.5
>4.5
Benefit to local
communities
Help local
economies
thrive
Pro bono value of
space occupied by
local community groups
Opportunity
led
Opportunity
led
Our
community
Reduce our waste
Our
environment
Reduce our emissions
Achieve
optimal
operational
efficiency
% of construction waste
diverted from landfill in
the UK
% of UK operations
waste to landfill
% of renewables in
owned store electricity
(Group)
Abs. operational GHG
emissions (market based,
tonnes CO2e)
Operational GHG
intensity (market based,
kg CO2e/sq m)
% of new stores
achieving EPC B or better
(excl. France)
100%
100%
1%
0%
100%
100%
1,014
820
0.93
0.75
100%
100%
Safestore Holdings plc | Annual report and financial statements 2023
47
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Our people
Target
Engagement score
Maintain score >80%
Performance 2022/23
90%
We know our people as individuals and show respect for each other,
enabling everyone to have a voice so that they can bring their full,
unique selves to work.
Our leaders are role models who build high trust. We recognise that
great people management takes time and therefore we have kept
colleague-to-manager ratios low to enable our leaders to invest their
time in our people.
We have built an environment where it’s natural for us to give regular,
honest feedback and to coach in the moment, and formally, we go
beyond mandatory training to promote life-enhancing learning where
everyone can continually evolve.
We are exceptionally proud that we hold the prestigious Investors
in People (“IIP”) 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. We see our colleagues as
an asset, and we understand that it’s our people who truly make
the difference.
We endeavour to operate employment practices that support
SDG 3 (Good health and wellbeing), SDG 8 (Decent work and
economic growth) and SDG 10 (Reduced inequalities) through
building, improving, and maintaining safe and secure working
environments, and advocating a diverse and inclusive workforce,
free from harassment and victimisation. Our Wellbeing, Diversity
and Inclusion strategies, and People Principles further expand on
how we make Safestore a great place to work.
Build, improve and
maintain safe and
secure working
environments
Advocate and improve
labour rights for all
our colleagues
Facilitate and
drive internal
development
Provide
lifelong learning
e en vir o n m ent
iv
t
i
s
o
P
Great life
s
t
y
l
e
c
h
o
i
c
e
s
Help our colleagues
to help themselves
Promote physical,
mental and
financial wellbeing
Safestore
wellbeing
strategy
P
e
r
s
a
n
o
d
n
e
d
u
al growth
cation
Role model a
values-based approach
through our leaders
m
a
e
t
Advocate a
diverse and
inclusive workforce
s
r
e
d
d
e
A c t i v e lea
a n d e ngag
More details about the progress we have made in each section of our wellbeing strategy can be found on pages 50 to 53.
48
Safestore Holdings plc | Annual report and financial statements 2023
Equality, diversity, and inclusion
We are committed to providing an inclusive workplace, encouraging
and welcoming diversity with zero tolerance of harassment and
discrimination. More details can be found in our People Principles
document online in the Governance section.
Our strong wellbeing foundation has enabled us to develop a strategy
setting out our approach to further support diversity and inclusion
at Safestore.
We are proud of Safestore’s diverse workforce; in our 2021 IIP
survey, 89% of colleagues agreed that Safestore values and respects
individual differences. Our Diversity and Inclusion Strategy is about
embedding and continuing the important work we’ve already done
to enable all our colleagues to feel confident to bring their full, unique
selves to work.
This year, we were pleased to publish our first ever diversity pay
gap report, which includes both ethnicity and gender data. We have
chosen to voluntarily report on our ethnicity pay data because we
believe this is an important step on our diversity and inclusion journey.
Safestore Diversity and Inclusion Strategy
Purpose
Enable colleagues to feel confident to bring their full, unique selves to work
Colleague
journey
Provide an inclusive
onboarding experience so
colleagues feel welcome
from day one
Integrate inclusion into
culture through our
behaviours and policies
Ensure learning and
development opportunities
are accessible for all
Colleague data
and analytics
Improve data quality
to understand our
workforce diversity
Invest in data development
and analytics
Positive
action
Target recruitment at
under‑represented groups
Introduce targeted colleague
support networks and
mentoring schemes
Use diversity data to inform
positive action
Enable community
affinity groups
Leadership and
management
Equip and educate
leaders to encourage
and welcome diversity
Actively remove bias
Create a safe space for open
and inclusive discussion
Continue awareness‑
raising activities and
communications
Colleague journey. This is about ensuring our culture is friendly
and welcoming to all. We want people to be themselves at work, and
initiatives such as our Values and Behaviours framework, health and
wellbeing support from day one, and improving the accessibility of our
learning and development opportunities support our culture.
Colleague data and analytics. In 2023 we have continued to collect
ethnicity data to better understand the ethnic mix of our workforce.
To date, over 86% of UK colleagues have volunteered their ethnicity
data. This data indicates that 31% of Safestore colleagues belong
to Black, Asian, or ethnic minority groups, compared with 18.3% of
people who make up this group in the UK (2021 census data).
We are proud of the ethnic diversity of our colleagues. We want
to collect more people data to further understand our diverse
communities such as the LGBTQ+ and neurodiverse communities,
to inform even more beneficial and tangible action.
Positive action. This is about recruiting from under-represented
groups, and building campaigns and opportunities for networks to
meet, be listened to and feel supported.
We undertake a number of initiatives to attract, recruit and retain a
diverse workforce, such as removing gender bias from our careers
website and job descriptions, and delivering unconscious bias training
to our recruitment managers.
We have spent time evaluating how we could better support our
female colleagues by working with a network of women to gain key
insights into their experiences at Safestore. Our awareness-raising
activity on our internal communications platform, Yapster, such as
our ‘Christmas Around the World’ and International Women’s Day
campaigns have generated lots of energy and engagement.
Leadership and management. This is about how we support
our leaders to encourage and welcome diversity. For example, our
equality, diversity and inclusion e-Learning module is part of the
induction for all new colleagues joining Safestore.
We want Safestore to be a safe space for discussion and curiosity
to enable colleagues at all levels to continually learn from each other.
Safestore Holdings plc | Annual report and financial statements 2023
49
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Our people continued
Equality, diversity, and inclusion continued
Equality, diversity, and inclusion data
Safestore’s gender and ethnicity split is outlined in the table below.
Our gender data is collected primarily for payroll, tax, and pay gap reporting, as part of our colleague onboarding process, where colleagues
are required to supply an answer to the question ‘What is your gender as stated on your birth certificate?’. The data in the table below is at
31 October 2023. All colleagues across the Group are included.
Our ethnicity data is voluntarily self-reported by colleagues, via our payroll self-service portal. The data in the table shown below is at 31 October
2023. The global landscape for data reporting on ethnicity is complex and, following a review of legal considerations, we only collect ethnicity
data for UK colleagues. The section for voluntary completion is entitled ‘Ethnic Group’ and the options are the self-defined ethnicity (“SDE”)
codes. Colleagues who have not provided data are not included in our calculations. We report on ethnicity as ethnic minority and white; however,
we do consider the data at a more specific level internally.
Further analysis can be found in the 2022 diversity pay gap report on our website. The report also sets out a range of actions we are taking to
help close the gap.
Group gender representation at 31 October 2023
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID, and Chair) 1
Number in
executive
management
Percentage of
executive
management
Number of all
colleagues
(exc. NEDs)
Percentage of
all colleagues
Men
Women
5
4
56%
44%
4
0
36
13
73%
27%
493
261
65%
35%
UK ethnicity representation at 31 October 20232
Number of
Board members
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID, and Chair)
Number in
executive
management
Percentage of
executive
management
Number of all
colleagues
(exc. NEDs)
Percentage of
all colleagues
White
Ethnic minority
Target for 2027
8
1
—
89%
11%
—
4
0
—
22
2
—
92%
8%
18.3%
319
137
70%
30%
Notes:
1
At the time of drafting, the Board had not met the target set out in Listing Rule 9.8.6(9)(a)(ii). With Ian Krieger set to step down as Senior Independent Director at the 2024 Annual General
Meeting, we are in the final stages of selecting his replacement for the role and expect to announce our new Senior Independent Director prior to the Annual General Meeting on 13 March
2024. We can confirm this will be one of our existing female non-executive directors and we will therefore meet all of the targets set out in Listing Rule 9.8.6(9)(a).
2
UK only. Where colleagues have voluntarily disclosed this data.
Positive environment
Colleague engagement
We believe that engaged colleagues, who feel valued by our business,
are the foundation of our customer-focused culture.
Our ‘Make the Difference’ people forum, launched in 2018, is a formal
workforce advisory panel, which enables frequent opportunities for us
to hear and respond to our colleagues.
Our network of 15 ‘People Champions’ collate questions and
feedback from their peers across the business and put them to
members of the Executive Committee.
Our people forum provides a listening culture, enabling high levels of
consultation. Innovation and ideas now come from every level.
We drive change and continuous improvement in responding to the
feedback we receive, via our internal communication channels and
back through our network of People Champions.
Our People Champions help us to continue raising awareness through
a selection of a broad range of topics for discussion on Yapster, our
internal social media platform. The aim is to appreciate our diversity, by
recognising and celebrating festivals and events, as well as individuals,
and to create a safe space for sharing and discussion. In addition, we use
Yapster to highlight local successes and recognition between stores and
regions with strong links made to Safestore’s alignment to the SDGs.
50
Safestore Holdings plc | Annual report and financial statements 2023
Health and safety
Safestore promotes a ‘Safety First’ culture within our business.
Nothing is more important to us than the health, safety and
wellbeing of our colleagues and customers. We are enthusiastic and
uncompromising in our commitment to achieve this safe environment.
We strive to raise the bar and set high standards regardless of country
or regional legislation and regulations. In doing so, we aspire to
prevent all injuries by reducing the Annual Injury Incident Rate (“AIIR”)
by creating a zero-incident culture and setting a new goal of zero
RIDDOR/Recordable injuries for 2024. Our progress includes:
• continuous engagement with our colleagues in developing practical
solutions to improve their own working environment;
• increased focus on colleague health and safety induction
training; and
• implementation of the Health and Safety digital platform that
supports colleagues and leaders across the Group.
Group health and safety statistics
Injuries
In 2023 we recorded a 16% reduction in customer, contractor, and
visitor (“CCV”) accidents, and a 41% reduction in accidents involving
our colleagues.
RIDDOR*/Recordable** injuries
CCV injuries resulting in RIDDOR include one cut to a finger and two
fractures, all requiring customers to attend hospital for further treatment,
and another recordable incident-free year for our colleagues.
Construction
We strive to create a safe workplace for all our construction projects
across all territories. We are constantly challenging our colleagues and
partners to exceed minimum standards. During 2023, the number of
reportable incidents on our construction sites was zero.
Colleague health and safety
Summary:
• 41% reduction in accidents involving our colleagues.
• 13 minor injuries were recorded over the past year.
• No recordable accidents/incidents were reported for this period.
Year ended 31 October
2021
2022
2023
Number of colleagues
Number of minor injuries
Number of reportable injuries
(RIDDOR*/Recordable**)
AIIR*** per 100,000 colleagues
648
19
1
154
751
26
0
0
753
13
0
0
Notes:
* RIDDOR = Reporting of Injuries, Diseases and Dangerous Occurrences.
**
Recordable = any work-related injury or illness that results in loss of consciousness,
days away from work, restricted work, or transfer to another job. Any work-related injury
or illness requiring medical treatment beyond first aid (European countries only).
*** Annual injury incident rate = the number of reportable injuries ÷ average number of
colleagues (x100,000).
Safestore Holdings plc | Annual report and financial statements 2023
51
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS • We continue to work closely with our occupational health provider,
including the provision of private counselling for colleagues in crisis
requiring additional support.
• Our Cycle to Work scheme remains popular.
• We continue to support new ways of working and this year, we have
increased our part-time and flexible working arrangements.
“ Health and wellbeing initiatives are being given
more attention and people are positive about the
commitment to wellbeing.”
Matthew Filbee
IIP Practitioner
Financial wellbeing
We understand that the current cost of living crisis is having a
significant impact on personal finances. As part of Safestore’s wider
wellbeing strategy, we are committed to doing what we can to ensure
the financial wellbeing of our colleagues.
Following a review of our pension provision, we chose to move our
scheme to a new provider, Aviva, and close the Scottish Widows
scheme to future contributions. 78% of our colleagues are members
of our pension scheme and now benefit from a lower management
charge, as well as other fund benefits. We are pleased to offer eligible
colleagues the opportunity to make their pension contributions
through a salary sacrifice arrangement, recognised as the most
tax-efficient way of making pension contributions.
In August, we opened entry into our 2023 Sharesave scheme, and are
delighted that 36% of our colleagues now share in our success by being
a member of at least one of our Sharesave schemes. This is further
evidence of high levels of colleague engagement across the business.
Sustainability continued
Our commitment to sustainability continued
Our people continued
Great lifestyle choices
We focus on offering simple, practical wellbeing initiatives, to support
our colleagues to lead healthier and happier lives. We recognise
that it is more important than ever for our colleagues to take care of
themselves and their loved ones.
• Our health cash plan, provided by Medicash, provides colleagues
with everyday reassurance on their health and wellbeing from top
to toe, inside and out, from GP appointments to skin health checks
and physiotherapy to counselling services. It remains a popular
benefit with our colleagues.
• Our Employee Assistance Programme (“EAP”) and other external
support organisations, such as Mind and Mental Health UK, provide
our colleagues with expert guidance and support on everyday
matters whenever they need it.
• Medicash’s new online support platform, Your Care, gives our
colleagues access to 24/7 support and counselling along with personal,
emotional and wellbeing tools for a happier and healthier life.
Personal growth and education
Learning and development
At Safestore, we have a strong focus on learning and development for
all our colleagues, with a genuine commitment to building a culture of
developing talent.
“ The overall culture of the organisation very
much projects the message that learning and
development are valuable.”
Matthew Filbee
IIP Practitioner
We use innovative methods of learning as well as traditional routes,
with lots of support from our managers at all levels. The survey revealed
that 93% of respondents knew how Safestore invests in learning and
development. In 2023, we delivered over 28,000 hours of training.
All learning is evaluated, with skills development and practice gained
through on-the-job supervision, regular coaching sessions, module
sign-off, observation, and feedback.
Across the Group, colleagues are given extra responsibilities and
opportunities to put skills and knowledge into practice.
Our leaders understand the importance of succession planning.
Talent management is sophisticated and transparent, with performance
management channelled through our Values and Behaviours framework,
to identify and support high potential individuals.
In the UK, both our Sales Consultant and Store Manager Development
programmes continue to grow and upskill our colleagues.
Everyone has the opportunity to discuss and agree their learning and
development pathways with their line manager, and this is executed
effectively. In our latest IIP survey, 88% of respondents stated that
they have opportunities to learn at work.
We were also delighted that our Store Manager Development
programme, now in its seventh year, had a record number of
distinctions, ten of the eleven participants who graduated in 2023.
Funded by the Apprenticeship Levy this programme provides the
opportunity to complete a Level 3 Management and Leadership
apprenticeship, with the additional opportunity to complete an
Institute of Leadership and Management (“ILM”) qualification.
52
Safestore Holdings plc | Annual report and financial statements 2023
Active leaders and engaged teams
Leadership
Our leaders bring out the best in our colleagues, motivating them
to work together to achieve our shared goals and objectives.
We achieve this by keeping colleague-to-manager ratios low,
enabling our leaders to invest time in encouraging and engaging our
colleagues, forming genuine connections with their teams. This is
evidenced by the exceptionally high leadership engagement score
of 90%, achieved in our IIP survey.
Our active leaders are energetic and passionate, engaging in honest,
open communication to connect with their colleagues. Our coaching
culture encourages two-way feedback supporting both personal and
professional growth, which is formalised through the setting of clear
goals and expectations, reviewed bi-annually.
Keeping our colleagues connected to the business and to each
other so that they feel supported has remained a focus and we
have introduced new programmes for our new colleagues and
line managers, to help to build knowledge and confidence across
our teams.
“ Many people said how much they love working
at Safestore and the pride in the service
delivered came across loud and clear. Everyone
described a friendly, supportive place to work.”
Matthew Filbee
IIP Practitioner
Values and behaviours
Our values are authentic, having been created by our colleagues.
They are core to the employment life cycle and bring consistency
to our culture.
We are empowered to do the right thing, not necessarily the easiest.
This enables us to feel comfortable challenging behaviours that are
not in line with our values.
We love customers – we deliver much more than
storage; we provide solutions that exceed our customers’
expectations and we expect our people to show
appreciation of our customers and their businesses.
We lead the way – we want people who talk with pride
about Safestore, set themselves high standards and
demonstrate passion for what they do.
We have great people – everyone has a key role to play
within Safestore and we need people who show respect
for everyone, no matter their position. Our people drive
their own performance and are keen to learn from others.
We dare to be different – we want people that adapt to
change and are willing to try new things. Part of daring to
be different involves actively seeking feedback to develop
new and existing skills.
We get it – we want people to be clear on our vision and
goals and, in turn, know what part they play in achieving
them. ‘We get it’ is also about communicating in a clear,
open, and honest way to enable sound decision-making.
Case study
Sean Cosgrove, Commercial Analyst –
Graduate, said:
“I joined Safestore as part of the graduate
scheme towards the end of 2022, working
within the commercial team as an analyst.
Since starting here, I have been overwhelmed
by the amount of support I have received
from both members of my team and from
across the business. Even in the short
amount of time I have been in the business,
I have already assisted in the process of
opening several new stores across Europe
as well as supporting other key elements
of the business. The graduate scheme has
allowed me to further improve my skills whilst
developing new ones, and I'm excited to see
what the future holds for me at Safestore.”
We also support ongoing professional development
by application of our professional qualifications policy,
supporting colleagues to gain formally recognised
qualifications in their chosen field. This commitment is
maintained by Safestore covering the cost of membership
of any relevant professional body such as the Chartered
Institute of Personnel and Development or the Association
of Chartered Certified Accountants.
Safestore Holdings plc | Annual report and financial statements 2023
53
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Our customers
Target
Maintain 4.5+ customer satisfaction rating in each market
Performance 2022/23
4.8
4.8
4.7
UK: Google
UK: Trustpilot
UK: Feefo
4.6
4.7
4.8
France: Trustpilot
Spain: Google
4.7
4.5
Belgium: Feefo
Belgium: Google
The Netherlands:
Trustpilot
Customer engagement
Customer-centric communication
The Group serves a diverse customer base and is committed to
providing excellent customer service across the UK and Europe.
Our success is rooted in our customer-centric approach, ensuring
that we cater to individual preferences and needs through various
communication methods, ensuring high standards, investing in
colleague training and tools, and promoting sustainability initiatives
via social media and blogs.
We recognise that customers have varied communication preferences.
We offer email, LiveChat and telephony support through our Customer
Support Centre to ensure that customers can reach us conveniently.
Our highly trained teams handle enquiries efficiently and professionally.
To connect with customers on their terms, we maintain an active
presence on social media platforms. By engaging with our audience
through Facebook, Twitter, Instagram, and LinkedIn, we provide
real-time support, share updates, and gather feedback.
Delivering exceptional customer service
Our commitment to customer service drives our success and we
achieve this by empowering our colleagues to go the extra mile to
exceed customer expectations and by maintaining rigorous quality
standards throughout our operations. Regular audits, focused
coaching, and investment in training and development help to
enhance our colleagues’ skills to ensure that we consistently deliver
high quality services.
54
Safestore Holdings plc | Annual report and financial statements 2023
Promoting sustainable and green business initiatives
Sustainability is a top priority for the Group as we are committed to
reducing our environmental footprint and promoting green initiatives.
To communicate our efforts, we use social media and blogs to reach
our UK and European audience. We regularly share updates about
our sustainability initiatives, such as reducing carbon emissions,
waste reduction, and eco-friendly product development. Our blog
delves deeper into our green practices, offering insights into our
sustainable supply chain, renewable energy usage, and partnerships
with eco-friendly organisations. We ensure that our customers are
well informed about our green initiatives, and we also highlight tips
for customers to live a greener life.
Addressing customer feedback and concerns
In today's highly competitive business landscape, understanding
customer needs and expectations is paramount to achieving success.
Customer feedback, in the form of reviews and ratings, provides
invaluable insights into our products and services. We collect, monitor,
and utilise customer reviews as they help us to understand what our
customers expect from our products and services, allowing us to align
and improve what we offer accordingly. In addition, positive reviews
build trust with potential customers. They serve as social proof that
others have tested and approved our products and services, which
can significantly impact purchase decisions. In contrast, negative
reviews pinpoint areas where we can enhance our service, providing
us with invaluable insights for continuous improvement and innovation.
Customer reviews also enable us to benchmark our performance
against competitors. By analysing our strengths and weaknesses
relative to others, we can refine our strategies.
In addition to collating Google reviews, we continue to use Feefo,
an independent reviews and insight platform, to gather real-time
and genuine feedback from our customers. Feefo is renowned for
its credibility in the industry. Our stores in the UK receive regular
feedback allowing customers to view reviews and ratings. In 2023,
Safestore UK achieved a customer service rating of 4.8 with 96%
rating their experience as ‘Excellent’ or ‘Good’.
We are proud to have been recognised with the Feefo Platinum
Trusted Service award in the UK for the fifth year in a row. This award
illustrates our dedication to providing exceptional customer experiences,
underlined by the fact that all our reviews are verified as genuine,
adding an extra layer of credibility to our feedback collection process.
Our team regularly monitors incoming reviews and ratings from
Google and Trustpilot, ensuring timely responses to customer
enquiries or concerns. This helps demonstrate our commitment to
customer satisfaction by identifying trends, common issues, and
opportunities for improvement.
Safestore UK has maintained an average rating of 4.8 on Google and
a TrustScore of 4.8 from 1,496 reviews on Trustpilot, a testament to
the business continuously incorporating customer feedback into our
business processes.
During the year, our French business maintained a TrustScore service
rating of 4.6 with 92% of customers rating their service experience
as ‘Excellent’ or ‘Great’. Additionally, in Spain, we achieved a 4.7 out
of 5 rating for customer feedback collected from Google reviews. In
Belgium, our customer service was rated 4.5 on Google and 4.7 on
Feefo, whilst we achieved a high score of 4.8 out of 5 on Trustpilot in
the Netherlands.
Our colleagues across all markets continue to be recognised for their
hard work in delivering a consistently high level of customer service.
This recognition boosts morale and reinforces our commitment to
making customer satisfaction a top priority as we continue to prioritise
the needs and expectations of our valued customers, ensuring our
ongoing success in the marketplace.
The user-friendly app makes access to storage units simple and
hassle free and offers multiple benefits to our customers, including:
• granting temporary access to others, such as family members
or movers, removing the need to be physically present at the
storage centre;
• usage tracking as the app may provide access logs, allowing
businesses to monitor who accessed their unit and when;
• enhanced security as smart locks often provide better security
features, like real-time alerts and monitoring, reducing the risk of
unauthorised access or theft; and
• time savings as there is no need for customers to wait for
colleagues to assist with access, making the move-in process
quicker and more efficient.
Empowering customers for sustainable choices
We are committed to enabling our customers to make sustainable
choices that have a positive impact on our planet. This is in
addition to making a positive social and economic contribution to
our communities and reducing the environmental impact of our
operations. We aim to provide tools and options that allow our
customers to embrace sustainability as part of their self storage
journey by:
• using digital contracts now across all markets where customers
can conveniently sign their contract via an online link. 82,850 digital
contracts this year have meant a total reduction of approximately
742,231 printed pages across the Group – equivalent to over 1,480
reams of paper. In the UK alone, there has been a 23% reduction of
printed pages this year versus last (approximately 651,915 pages or
over 1,300 reams of paper);
• championing Refill, a scheme available in 122 Safestore stores
across the UK providing free tap water to make it easy for the public
to refill reusable water bottles instead of buying new plastic ones;
• providing sustainably packaged merchandise and eco-friendly box
products in our stores across all markets; and
• installing electric vehicle charging points in store car parks for
customer use in an effort to promote eco-friendly mobility.
We believe that encouraging our customers to select greener
alternatives is not just an ethical obligation but also a practical
necessity for the wellbeing of our planet, society, and future
generations. It's a collective effort that requires businesses,
individuals, and communities to work together towards a more
sustainable world.
Product quality and innovation
Digital contracts
Delivering a great customer experience is at the heart of our business,
and today's customers expect more than just a product or service;
they demand a seamless and personalised journey that caters to
their unique needs and preferences. This year, we launched digital
contracts in the UK which offers the opportunity for prospective
customers to obtain a storage quote and, within a few minutes, agree
a contract to rent their storage space online on their connected
device. The resulting contract is then sent by email. We have learnt
from and adapted to evolving user behaviour online and we have
appropriately identified customer types who are confident to complete
the storage rental process entirely online.
App-based storage centres
In addition, the introduction of digital contracts readies the business
for automated, app-based stores like our Christchurch and new
Eastleigh (opened post-year end) locations, where customers can
open storage unit locks with their smartphones, eliminating the need
for physical keys or fobs.
Customer, contractor, and visitor (“CCV”) health
and safety
We pride ourselves on providing a safe environment for our
customers, contractors, and visitors.
Summary:
• 16% reduction in customer, contractor, and visitor accidents.
• 33 injuries were recorded over the past year, three of which were
reportable under RIDDOR*.
• 10 minor injuries were recorded to contractors and 23 to customers.
No injuries were recorded to visitors.
• Injuries were recorded as 14 minor cuts, 14 bumps and bruises and 2
muscular, mainly relating to customers handling their goods.
Year ended 31 October
Number of stores
Customer, contractor, and
visitor movements
Number of minor injuries
Number of reportable injuries
(RIDDOR*/Recordable**)
RIDDOR per 100,000
CCV movements
2021
161
2022
179
2023
190
206,871
242,559
225,828
46
0
0
38
1
0.4
30
3
1.3
Notes:
* RIDDOR = Reporting of Injuries, Diseases and Dangerous Occurrences.
**
Recordable = any work-related injury or illness that results in loss of consciousness,
days away from work, restricted work, or transfer to another job. Any work-related injury
or illness requiring medical treatment beyond first aid (European countries only).
Safestore Holdings plc | Annual report and financial statements 2023
55
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Responding to local needs
Our commitment to responding to the needs of local charities
and not-for-profit organisations reflects our corporate values
and a demonstration of our dedication to making a meaningful
difference where it matters most – in our community. We continue
to extend financial support to both local and national charities,
offering subsidised storage space to facilitate their invaluable work
in various areas such as homelessness, mental health, domestic
violence, and more.
The provision of subsidised storage space is a tangible way in which
we support the essential work of charities within our local community,
by reducing their costs and empowering them to operate more
efficiently, allocate resources effectively, and, ultimately, focus more on
their primary mission of making a positive impact on those they serve.
During December, our Head Office colleagues supported a collection
for a local foodbank. By actively participating in such charitable
activities, we strengthen our bond as a team and demonstrate our
commitment to making a positive impact on the lives of those in need
within our local community. We believe that, together, we can make a
difference that extends far beyond the walls of our workplace.
Safestore holds a charitable fund with Quartet Community
Foundation, dedicated to supporting local organisations that help
people in need in Bristol, Bath and North East Somerset, North
Somerset and South Gloucestershire. Between April 2022 and
March 2023, Quartet awarded over £5 million in grants to over 1,000
local charitable organisations. This year, Safestore’s funding has
been allocated to its Cost of Living Fund, supporting people in the
local community who have been struggling to meet their basic needs.
Grants have particularly focused on food and fuel poverty, supporting
community food projects, and projects providing advice on dealing
with rising energy prices.
Sustainability continued
Our commitment to sustainability continued
Our community
Target
Provision of subsidised space and additional support to
high impact local community groups – opportunity led
Performance 2022/23
20,941 sq ft
provided worth
£919,566
Strengthening local partnerships and
community wellbeing
Collaborating for positive change
Our business is committed to engaging in co-operative efforts for
constructive transformation within our local community. We believe
that by working together with community organisations, residents,
and other businesses, we can make a meaningful impact. Whether it's
supporting local initiatives, promoting sustainability, or furthering
economic growth, we are dedicated to being a force for positive
change. Our goal is to create a stronger community where everyone
can thrive.
We continue to do this by:
• developing brownfield sites;
• 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.
Supporting community development
We are committed to supporting charities and community initiatives
because we understand the importance of championing causes that
resonate with our colleagues, customers, and local neighbours. In 132
stores across the UK, we continue to:
• provide fundraising support to existing and new local
charity partners;
• offer subsidised storage space to local communities through our
‘charity room in every store’ scheme;
• actively seek out practical and creative solutions by working with
and supporting a number of charitable causes; and
• leverage social media and our blog platform to promote our charity
partners and raise awareness of their cause.
During the year, the space occupied by local charities in 184 units across
104 stores was 20,941 sq ft and worth £919,566 (FY2022: £727,356).
Our aspiration is to have at least one subsidised charity room in
every store.
By donating subsidised storage space to registered charities, we
aim to contribute to the wellbeing and progress of the communities
in which we are based. It is our belief that businesses have a
responsibility to give back and create a positive impact, and we are
dedicated to playing our part in building a better future for all.
56
Safestore Holdings plc | Annual report and financial statements 2023
HandsOn London
For the eleventh year in a row, Safestore UK teamed up with the
WrapUp London campaign to support its annual coat drive to help
those in need during the winter of 2022.
More than 20,300 coats were collected during the campaign, which
began in early November and ran through December. Coats were
distributed to the homeless, refugee families, the elderly, those fleeing
domestic violence, and others living in crisis through a network of over
100 London charities and community groups.
Several Safestore UK centres were again used as local drop-off
points for ease of access for the public, particularly with the ongoing
train strikes at the time. Our colleagues also offered their support
by marketing the campaign via social media, contributing their own
coats, and donating extra storage space to facilitate the sorting,
packing and distribution of the coats.
Since the campaign was launched in 2011, volunteers have collected,
sorted, and distributed a total of 212,032 winter coats, which
has made a real positive difference in the lives of the city’s most
vulnerable people.
Over the years, and in partnership with WrapUp London, Human
Appeal and Rotary Club International, the campaign has extended
outside of London to 21 other collections in major towns and cities
across the UK including Glasgow, Manchester, Birmingham, Bath,
Bristol, Leicester, and Cardiff.
This year, Safestore’s involvement included:
• providing storage space across 20 stores in London, seven stores
in Greater Manchester, four in Essex, two in Birmingham, Bristol,
and Glasgow, and one each in Bolton, Bury, Cardiff, and Leicester;
• provision of 6,230 sq ft of storage space enabling 1,697
campaign volunteers to spend 5,772 hours sorting and packing
up coats for distribution;
• the stores acting as drop-off points beyond the campaign period
and receiving numerous donations from other businesses,
community organisations and the public; and
• using our internal and external communications platforms to
raise awareness of the WrapUp London cause and inspiring our
colleagues to get involved locally.
Jon Meech, CEO, HandsOn
London, said:
“On behalf of HandsOn
London, Human Appeal and
Rotary Club International, I
want to extend my heartfelt
gratitude for Safestore’s
unwavering support
during our coat collection
campaign. The generous
provision of storage space
for the eleventh year in a
row has been instrumental
in our mission to assist
those who find themselves
caught in the cost of living
crisis, and especially the
most vulnerable members
of our society, during the
harsh winter months.
With the donated storage space and
Safestore centres acting as drop-off
points, our volunteers were able to
efficiently collect, store, sort, and
pack the 20,300 coats donated by
the public. Safestore’s assistance
made it possible for us to reach
a broader audience and provide
essential winter clothing to those who
would have otherwise faced immense
hardships. We are deeply appreciative
of Safestore's commitment to making
a positive impact on our community
and look forward to continuing this
partnership in the future.
Thank you once again for being a vital
part of our ongoing work to make a
difference in the lives of those who
require our support the most.”
Safestore Holdings plc | Annual report and financial statements 2023
57
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Our community continued
Strengthening local partnerships and community
wellbeing continued
Engaging with stakeholders
We welcome opportunities for constructive engagement and
collaborating with others as part of our commitment to making a
positive impact which extends beyond our core operations. We seek
to align with the values and aspirations of our stakeholders and create
lasting and positive change in the communities we serve.
As a Group, we believe that our colleagues are at the heart of our
business, and therefore we’re keen to create a positive impact
together through working with charities in the local area and
empowering our teams to be active participants in charitable activities.
We are proud to offer financial support to a range of local charities,
ensuring that our customers can trust that their purchases align with
their own values. We take our reputation seriously, and we know our
shareholders and investors do too. We’re committed to doing the
right thing, ensuring that our charitable actions are clear, ethical, and
conducted with integrity.
Our relationships with our suppliers and partners are about more
than just business – they’re about collaboration and aligning our
shared values, which include our sustainable and charitable work.
We’re committed to making our collaborations stronger and more
meaningful going forward. We’re proud to support local causes that
matter to our colleagues across the regions all over the UK – and this
reflects our continued commitment to making a positive difference in
the areas in which we operate.
Engaging with our stakeholders is important as it fosters a
co-operative relationship that enhances our overall effectiveness
and social impact. It reinforces our credibility and inspires trust and
a sense of shared responsibility, leading to a more lasting positive
change in society.
58
Safestore Holdings plc | Annual report and financial statements 2023
Our environment
Target
UK
owned stores powered by 100% renewable electricity
Reduce
UK store waste to landfill by 50% by 2025 vs 2016/17 level
Increase
the diversion of construction waste from landfill to 100%
Reduce
carbon emissions by 20% of 2021 baseline by 2025
Performance 2022/23
diversion from landfill for UK operational
waste ahead of schedule
100% completed
100% completed – we have achieved 100%
100% completed – we have achieved 100%
17% on track – absolute market-based
diversion of UK construction waste
from landfill
emissions 17% below 2022 despite
portfolio growth; intensity 19% below
2022/23 highlights
Green
electricity used across the Group with certification
for the UK, France, the Netherlands, and Spain
100%
diversion from landfill for UK
operational waste
32
UK stores now have gas use removed, reducing
overall usage year-on-year by 21%
7
new plug-in hybrid electric cars have been
purchased, replacing petrol vehicles in the UK
100%
first UK store development with all construction
waste diverted from landfill
590
equivalent number of trees saved from being
felled by using fully recycled paper
Climate action and emissions reduction
In this section, we explain how we are reducing our impact on the
planet through ongoing improvements in construction standards and
our store operations. We also include our Task Force on Climate-
related Financial Disclosures (“TCFD”) statement, through which we
seek to understand and manage the potential risks (and opportunities)
to our business associated with a changing environment.
Our net zero commitment
We are pleased to share our commitment to become an operationally
net zero group by 2035. This commitment covers Scope 1 and
2 emissions and Scope 3 emissions, which relate to ongoing
operations (water, waste, electricity, transmission and distribution,
and business travel).
Our net zero transition plan is a combination of consumption reduction
initiatives as outlined later in this section such as phasing out gas
heating in the UK portfolio and ensuring all energy consumed
is self-generated (where viable) or purchased from certified
renewable sources.
We also intend to work with our construction partners to understand
the baseline of embodied carbon in our new developments and
explore ways of reducing this where viable. Our sustainable construction
standards aspire to maximise the use of recycled material and
minimise waste whilst building to Building Research Establishment
Environmental Assessment Methodology (“BREEAM”) ‘Very Good’
standards. Based on research by the London Energy Transformation
Initiative (“LETI”) redevelopment projects have an embodied carbon
footprint of approximately 50% of new build developments. As such,
the Group’s flexible model is likely to generate less embodied carbon
than operators which develop new build structures exclusively.
Task Force on Climate-related Financial
Disclosures (“TCFD”)
Since 2021, we have been on a journey to implement the relevant
recommendations of the TCFD, providing our stakeholders
and investors with insight into the key climate-related risks and
opportunities that are relevant to our business and how these
are identified and managed. We report against the eleven
recommendations of the TCFD in this year’s disclosures.
Governance
Our Chief Executive Officer has overall responsibility for climate-related
risks and opportunities. Day-to-day management of climate-related
issues is carried out by our sustainability group which is co-chaired by
three members of the Executive Management Team (see sustainability
governance section for organisation structure). The Group meets
quarterly and is the forum for determining our sustainability strategy,
reviewing performance, identifying emerging sustainability issues, and
determining their materiality for reporting and escalation via the Group
risk management process.
The Board oversees climate-related risk via the Group risk management
process. The Board takes climate issues into consideration during the
investment appraisal process, where it scrutinises major investments
including acquisition, development, and refurbishment plans which may
include climate-related aspects of design. Ongoing risk identification
and management are through the relevant functional teams, for example
through proposed or actual responses to changes in regulation such as
the Minimum Energy Efficiency Standards (“MEES”) in the UK.
Our commitment to address climate-related risks is embedded across
the Group through a carbon intensity KPI. The performance against
this measure is linked to executive remuneration, aiming to incentivise
progress against carbon emissions reduction targets. The Board reviews
progress on carbon reduction alongside other strategic initiatives annually
as part of the annual targets and remuneration cycle.
Safestore Holdings plc | Annual report and financial statements 2023
59
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Our environment continued
Task Force on Climate-related Financial
Disclosures (“TCFD”) continued
Risk management
The Sustainability Group is responsible for identifying general
climate-related risks that are managed by the Board via our corporate
risk management process (see the Audit Committee report for details of
our approach to risk management). In addition, the Property function
is responsible for identifying risks specific to new development
projects as part of the investment appraisal process. The Sustainability
Group has conducted workshops incorporating inputs from internal
and external experts and climate model data to explore the relevance
and potential financial impact of the six risk themes identified in the
TCFD framework over the short (to 2030), medium (to 2050), and long
(beyond 2050) term.
These themes remain under review, particularly the physical risks
to the Group portfolio as we expand into new markets, climate models
evolve, and governments and municipal authorities develop their own
mitigation strategies.
The completed climate-related risk register is reviewed and approved
by the Audit Committee during the financial year such that the
significance of climate-related risks is considered in relation to risks
identified in the standard risk management process. This ensures
the management of climate-related risks is integrated into the
Group’s overall risk management framework. The climate-related
register is reviewed annually to incorporate ongoing refinement
and quantification of risks and to ensure the register reflects any
material changes in the operating environment and business
strategy. Once identified, further details related to each key risk
and opportunity, such as a quantification of the financial impact,
the appropriate strategic response and cost of response and the
variance of key risks in relation to climate-related scenarios, are
developed where possible. These details help to determine the
materiality of each risk and, alongside the impact assessment
outlined above, this allows the Group to prioritise resources in
managing the most material climate-related impacts, determine
the best management response or highlight areas requiring
further investigation.
An example of the day-to-day management of risks would be the
incorporation of mitigations for high exposure sites into construction
designs before submission for planning approval.
Strategy
Our business is exposed to both risk and opportunity from climate
change primarily as a consequence of owning and operating real
estate assets in the UK and Western Europe. We seek to understand
and mitigate the physical and financial risks that could be material to
the business. We have considered several climate hazards (wildfire,
extreme heat, water stress, coastal flooding, fluvial flooding, drought)
and their relevance to the context of our business. Of these, flooding
risk was assessed as the only relevant risk for the UK, which accounts
for most of the Group property portfolio by value and floor area.
These findings can likely be generalised for Northern European
markets, which will experience similar physical consequences. Whilst
our Spanish assets may experience different physical hazards, they
currently represent less than 3% of the Group by asset value and floor
area and have therefore not been considered separately.
Climate-related risks and opportunities are assessed over multiple
time horizons because we expect that transitional risks are likely to
be ‘front-loaded’ as the international community attempts to meet
the goal of keeping warming to 1.5°C or below. Physical risks to
our assets are likely to increase over time, particularly if the global
economy does not decarbonise at the rate required to keep warming
below the target level. Accordingly, we assess climate-related risks
and opportunities over the short (to 2028), medium (to 2050), and
long (beyond 2050) term. In keeping with the Group’s approach to
risk management materiality, risks were deemed to be low impact
where the potential annual EBITDA impact is estimated to be below
£100k and/or balance sheet impact is below £10 million. High impact
is where either the potential EBITDA impact is greater than £1 million
or a balance sheet (valuation) impact would exceed £25 million
(approximately 1% of property valuation). EBITDA consequence
of between £150 thousand and £1 million or likely balance sheet
impairment between £10 million and £25 million was considered
medium impact.
The assessment of the resilience of the business, specifically the asset
portfolio, was guided by a range of scenarios published by external
agencies, such as the UK Met Office UKCP18, and looked at both
physical and transitional risks under two climate warming scenarios:
one within 1.5 to 2.0°C (RCP 2.6); and one up to 4.0°C (RCP 8.5).
60
Safestore Holdings plc | Annual report and financial statements 2023
Risk type
Description
Potential
impact
Timeframe
Mitigation/
resilience measures
Physical risks
Chronic
Acute
Transition risks
Policy and legal
Regulation
relating to stricter
environmental standards
Physical disruption as a result of longer term shifts in climate
patterns (e.g. sustained higher temperatures or rainfall) that
may cause sea level rise or chronic heat waves. Intensity of
weather (acute risk below) is deemed more significant for the
business. Intensity of weather (acute risk below) is deemed
more significant for the business.
Primarily flooding risks (northern Europe markets) triggered
by changes in the frequency of extreme rainfall events (based
on mm/day thresholds), which are projected to increase in all
warming scenarios, especially in summer and late autumn.
Costs that may be incurred for the few stores exposed
include mitigation CAPEX, operational disruption, physical
repairs, clean-up, insurance premia increases, and reduced
customer demand as a result of reputational damage.
Low
Medium–long
Medium
Medium–long
Increased stringency of building and planning requirements
in support of national net zero targets. Local authorities will
seek to use planning systems to deliver progress against
climate goals which will impact on build specification and
associated costs. MEES standards also increasing for
commercial lettings (office locations only) which will drive
upgrade expenditure.
Medium
Short
Avoid high risk exposure
areas. Where a store is
exposed use appropriate
mitigation solutions for the
context (e.g., enhanced
drainage, flood barriers,
water pumps)
As a last resort, relocate to
nearby lower exposure site
Engage planning authorities
to ensure specifications for
new stores are proportionate
given intended use
Identify existing locations
exposed to regulatory
changes – relocate or
change use (remove offices)
if improvements unviable
Climate change litigation Claims brought by stakeholders (e.g. investors and
Low
Medium
—
public interest organisations) perhaps due to failure to
mitigate impacts of climate change, failure to adapt, or the
insufficiency of disclosure around material financial risks.
Reporting obligations
Additional reporting burden on carbon emissions,
including Scope 3.
Low
Short
Technology
Electric vehicles
Market
To deliver net zero targets, electric vehicle use will increase
and drive demand for charging point infrastructure for
customers and colleagues. May be mandated by some
local authorities as part of planning process. This will impact
capital budgets for new builds and retrofits. However, this
could also be a revenue opportunity in high traffic locations
with an appropriate commercial arrangement.
Low
Short
—
—
Valuation of
properties with lower
efficiency rating
Risk of valuation impairment of assets with low efficiency
ratings. Only heated areas of storage facilities are rated –
these can usually be cost-effectively improved.
Low
Medium
—
Supply chain resilience/
cost of materials
Risk to development costs due to demand versus supply
of key materials such as insulation and cost of inputs which
may incur carbon premium (steel and cement).
Medium
Short–medium Seek to convert existing
structures where possible/
available. Ensure competitive
tendering on major projects
Cost and availability
of capital
Risk of downgrading/cost premium as ESG considerations
are incorporated into credit ratings and other lender/
investor screening.
Low
Short
—
Safestore Holdings plc | Annual report and financial statements 2023
61
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Our environment continued
Task Force on Climate-related Financial Disclosures (“TCFD”) continued
Risk type
Description
Transition risks continued
Potential
impact
Timeframe
Mitigation/
resilience measures
Reputation
Stakeholder risk
Employee risk
Increasing public awareness of and appetite to tackle climate
change could create reputational risk if there is failure to
reduce operational and embodied carbon. This could manifest
in delays to planning processes.
As colleagues become increasingly engaged with climate
change issues, perceived failure to make progress on
decarbonisation could impact talent recruitment and retention.
Low
Short–medium —
Low
Short–medium —
In summary, we expect physical climate-related risks to have some
localised impacts on our business. Specifically, the impact of more
frequent intense precipitation events is deemed relevant in the
medium to long term for a subset of exposed stores. We also expect
the transition to a low carbon economy to pose some limited financial
risks in the short term as we respond to changes in regulation and
incur costs associated with decarbonising our building development
and operations. However, there may also be opportunities that arise
from the transition, as well as the physical impacts of extreme weather.
Regardless of the scenario, we believe the Group’s business model
and strategy are likely to be resilient as its assets have overall limited
exposure and vulnerability to climate-related risk. Accordingly, there
are limited ongoing financial implications beyond the cost of meeting
higher building standards and introduction of mitigation measures.
The Group will, therefore, continue to grow its portfolio, assessing
each investment for climate risk in addition to financial considerations
and making necessary physical and financial allowances for mitigations
where appropriate, as it already does today.
The self storage sector is not a significant consumer of energy
when compared with other segments of the real estate landscape.
According to a 2023 report by KPMG and EPRA1, self storage
generates the lowest greenhouse gas emissions intensity of all
European real estate sub-sectors. Reflecting the considerable
progress made on efficiency measures and waste reduction to date,
Safestore’s emissions intensity is considerably lower than the self
storage sector average.
GHG intensity (Scope 1 and 2) by REIT sector
kg CO2e/m2 per year (2022)1
Residential
Industrial
Office
Healthcare
Retail
Self storage
Safestore
38
37
34
28
4
3
246
Note:
1
KPMG/EPRA: Deep-dive on Non-Financial Performance: Listed Real Estate companies
across Europe, November 2023 (based on EPRA sBPR data sets for 101 listed
companies).
Nevertheless, as part of our commitment to SDG 13 (Climate action)
we have been working towards a previously set near term carbon
reduction target to 2025 (see sustainability targets and KPIs).
In addition, we have a commitment to work towards operational net
zero by 2035. This commitment covers Scope 1 and 2 emissions plus
Scope 3 emissions which relate to ongoing operations (water, waste,
electricity transmission and distribution and business travel). This year,
we have introduced an interim target for absolute emissions and
emissions intensity for the financial year ending 2028 as a milestone
on our journey to operational net zero (see sustainability targets and
KPIs on page 47).
62
Safestore Holdings plc | Annual report and financial statements 2023
Physical risks
The primary physical risk to our business relates to the increasing
likelihood of extreme weather events (particularly intense precipitation
and flooding). Based on current data, our insurer’s flood assessment
at the last renewal indicates that 91% of the Safestore portfolio by floor
area (90% by insured value) has little to no exposure to river/coastal
flood risk (the chance of a flooding event occurring annually is less
than 0.5%). This corresponds to just twelve current locations in the
UK with an elevated risk. There is a slightly higher exposure to surface
water flood risk – 71% of floor area and value is in stores with less than
0.5% Annual Exceedance Probability.
Accordingly, overall the portfolio has low exposure to acute flooding risk,
and whilst the frequency of extreme precipitation events are projected
to increase in all warming scenarios, the number of medium and high
impact rainfall days (defined by the UK Met Office’s National Severe
Weather Warning Service as 24-hour precipitation thresholds in mm/day
which are designed to be used for identifying prolonged rainfall which
may lead to flooding) are still projected to be relatively rare events1.
Note:
1
Hanlon, H.M., Bernie, D., Carigi, G. et al. Future changes to high impact weather in the
UK. Climatic Change 166, 50 (2021). https://doi.org/10.1007/s10584-021-03100-5).
Flood risk of UK portfolio
(% of insured value excl. customer goods)
100%
80%
60%
40%
20%
0%
River/coastal %
Surface water %
Low/medium (<0.5% AEP)
High (>0.5% AEP)
Research using the most recent granular climate models2 confirms
this projection of extreme rainfall events and demonstrates the
elevated risks are in the autumn and summer seasons specifically.
Spring and winter events are rarely projected to exceed any impact
threshold out to 2080, even in the low mitigation (RCP 8.5) scenario.
This pattern is expected to be similar across the UK. This research
implies that the probability of these extreme events will rise in autumn
by 5–10% by 2040 and by 20–40% by 2080. The summer season
shows the largest change, especially towards the end of the century,
with probability close to 50% higher for a 1-in-200-year event, i.e.
despite overall summer drying trends in the future, increases in the
intensity of summer rainfall events are projected. It should be noted,
however, that projections for rare events have a high degree of
uncertainty, especially in the outer years of a projection period.
From prior experience, the main consequences of these intense
precipitation events are clean-up, repairs and maintenance costs, and
short term impact on asset availability (temporary closures preventing
new move-ins). Costs are usually recovered from insurers so over
time it is reasonable to expect insurance premia and flood-related
excesses will increase if extreme events occur more frequently.
There is also the longer term risk of lower occupancies in exposed
stores – although customer goods are also insured to their declared
value, there is the possibility of a reputational impact. A reasonable
assumption for the cost based on prior experience (borne by insurers,
direct impact being the impact on cost and availability of insurance) of
remediation after an extreme precipitation event is £100k per event,
regardless of the warming scenario.
Projections of low, medium, and high impact rainfall days in
the UK per year under different warming scenarios2
r
y
/
s
y
a
d
l
l
a
f
i
n
a
R
t
c
a
p
m
I
w
o
L
r
y
/
s
y
a
d
l
l
a
f
i
n
a
R
t
c
a
p
m
I
i
m
u
d
e
M
r
y
/
s
y
a
d
l
l
a
f
i
n
a
R
t
c
a
p
m
I
h
g
H
i
160
140
120
100
80
60
40
20
0
50
40
30
20
10
0
20.0
17.5
15.0
12.5
10.0
7.5
5.0
2.5
0.0
England and Wales
NE Scotland
NW Scotland
Northern Ireland
SW Scotland
SandE Scotland
61-90
81-00
00-17
1.5
2.0
2.5
3.0
4.0
Global Warming Level
England and Wales
NE Scotland
NW Scotland
Northern Ireland
SW Scotland
SandE Scotland
61-90
81-00
00-17
1.5
2.0
2.5
3.0
4.0
Global Warming Level
England and Wales
NE Scotland
NW Scotland
Northern Ireland
SW Scotland
SandE Scotland
61-90
81-00
00-17
1.5
2.0
2.5
3.0
4.0
Global Warming Level
It should be noted that where Safestore invests in property in higher
risk areas, risk mitigation measures are usually proactively deployed.
As such, even in extreme weather scenarios the majority of the UK
portfolio is not likely to be impacted from an ongoing operation,
insurance risk premium or valuation basis. Mitigation measures
(where deployed) should minimise disruption at higher risk sites,
and these locations may, in fact, experience increased demand from
impacted local communities as they seek temporary storage for
their belongings. In locations where mitigation becomes unviable, or
cost/ availability of insurance becomes prohibitive the Group would
seek to relocate to a nearby less exposed site.
Note:
2
Shane O’Neill, Simon F.B. Tett, Kate Donovan. Extreme rainfall risk and climate change
impact assessment for Edinburgh World Heritage sites, Weather and Climate Extremes,
Volume 38, 2022.
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
The provision of electric vehicle charging facilities could deliver a
customer benefit in the short term whilst also reducing associated
Scope 1 (business travel) and Scope 3 (customer travel to/from stores)
emissions and provide another ancillary revenue stream.
It should also be noted that well-positioned self storage facilities
could be seen as adding ‘system resilience’ to supply chain
disruptions and facilitating recovery post-extreme weather events via
temporary storage of business or consumer goods. This would be
of more relevance in the longer term as chance of extreme weather
events increases.
Metrics and targets
To assess climate risk, we internally record and monitor a range of
construction and operational impact metrics such as development
cost trends, unit availability (offline units) and damage claims relating
to water damage. We also track and disclose the floor risk exposure of
the UK property portfolio (see section on physical risks).
In addition, we monitor and report a range of metrics relevant to the
property sector per the EPRA sBPR recommendations. Specifically,
we disclose:
• energy consumption (gas and electricity) and building energy
intensity per unit floor area;
• water use and water use intensity;
• waste generation including the proportion diverted to landfill;
• Scope 1 and 2, and operational Scope 3 greenhouse gas
emissions and emissions intensity; and
• Energy performance ratings (EPC or equivalent) of new
store developments.
These are disclosed in the following section of this report, on pages
65 to 77. Specifically, Scope 1, 2 and 3 emissions are disclosed in the
mandatory greenhouse gas reporting and Streamlined Energy and
Carbon Report on pages 70 to 77.
Supplementary data can be found in the Sustainability section of our
website, including the basis of reporting and independent limited
assurance on selected metrics. Scope 3 emissions which relate
to ongoing operations (water, waste, electricity transmission and
distribution and business travel) are measured and actively managed.
Upstream Scope 3 emissions relating to purchased goods and capital
expenditure are not currently reported, but we are actively engaging
with our suppliers to ensure these are being considered, for example,
through consolidation of deliveries to our stores or the proportion of
recycled material used in development projects. Downstream Scope
3 emissions (primarily customer journeys to our stores) are likely to
be material; however, we are not currently able to measure or report
these. We contend that collecting and reporting this data would not
be an appropriate use of time or resources given that emissions will
naturally abate over time as the consumer vehicle fleet and electricity
grid decarbonise in each of our markets.
Sustainability continued
Our commitment to sustainability continued
Our environment continued
Task Force on Climate-related Financial
Disclosures (“TCFD”) continued
Transitional risks
Our primary transition risks are policy and regulatory changes, which
may increase building specifications to meet net zero objectives.
Local authorities will continue to use planning processes to deliver
against their own objectives and policies such as Minimum Energy
Efficiency Standards (“MEES”) will impact landlords in the residential
and commercial sectors. To ensure relevant UK assets meet MEES
minimum standards, an estimated capital investment of approximately
£650 thousand will be required which will be incorporated into our
annual capital expenditure plans. For more details, see page 66.
Should any of our facilities with offices be unable to cost-effectively
meet MEES standards, we would convert office space into storage
area, which does not have this requirement meaning there is minimal
risk of lost revenue or ‘stranding’ of assets.
Requirements for new projects to meet more stringent energy
efficiency standards and include features such as solar photovoltaic
panels and electric vehicle charging facilities will add to the capital
costs of new developments; however, these would represent a small
portion (1–2%) of a new development project and would likely be
recovered through lower ongoing operating costs over the lifetime of
the building. A related market risk of carbon taxes on core building
materials such as steel could have a larger impact; however, where
possible, Safestore will convert existing structures and is, therefore,
less exposed to these increases in cost and embodied carbon.
Our transition plan is a combination of operational improvements,
including consumption reduction initiatives such as phasing out of
gas heating in the portfolio and ensuring all energy consumed is
self-generated (where viable) or purchased from certified renewable
sources. New buildings introduced to the portfolio will be developed
to high energy efficiency standards. Some residual emissions may
require the purchase of carbon offsets from a credible scheme(s).
We estimate that the roadmap to operational net zero will require a
total investment of c. £3 million to 2035, with investments in later years
subject to detailed business case evaluation.
Opportunities
The transition to a low-carbon economy is likely to present
opportunities as well as risks. In general, businesses that build and
operate sustainable facilities are well-positioned in a world where
both local planning departments and end consumers are making
decisions with climate change in mind. In addition, reducing the
energy intensity of the business and reliance on gas is financially
advantageous, particularly in an era of volatile energy prices. Removing
gas-burning appliances from facilities also reduces associated fire
and carbon monoxide exposure risk. However, it should be noted that
the business is not an intensive user of energy (energy costs were
1.5% of revenue in 2022), unlike other more intensive usage sectors,
so the variability of power prices is not considered a significant risk
or opportunity. Nevertheless, it is likely that buildings with lower
operating costs and carbon emissions intensity will attract a valuation
premium and lower cost of funding over the medium to longer term.
Assuming PV installations progress, and grid connections are made,
and a suitable trading mechanism emerges, sales of excess power
generated from rooftop solar installations could become a revenue
stream in the medium term in addition to supporting decarbonisation
in our communities and the wider economy.
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Safestore Holdings plc | Annual report and financial statements 2023
Strategy for operational net zero
We will achieve operational net zero by 2035, through:
a) Reducing and optimising what we use
• Completion of lighting efficiency programme
(external signage and customer unit lighting)
• Voltage optimisation at selected sites
• Decommissioning of gas appliances
• Installation of building management
• Systems for remote monitoring and power
management (business case dependent)
b) Using only zero carbon energy
• Installation of solar photovoltaic on new build stores
where viable
• Securing certified green electricity through PPAs and/or
‘high quality’ tariffs
• Transition of company car fleet to PHEVs* and BEVs*
and introducing charging points
• Retrofit of rooftop solar photovoltaic to selected stores
(business case dependent)
Total investment of
c. £3m spread until 2035
Note:
* PHEV = plug-in hybrid electric vehicles; BEV = battery electric vehicles.
Sustainable operations
Renewable energy
Electricity
We are committed to the use of green electricity. We actively seek to
reduce our overall energy usage through efficiency programmes and
self-generate our power where practicable.
Across our UK estate, we are supplied by 100% REGO certified
renewable energy. This electricity is supplied by multiple renewable
sources, including wind farms off East Anglia and Glebe Farm
Solar Park1.
We have solar installations with a total capability of over 150kW2.
These panels provide self-generated electricity, allowing us to reduce
our demand for grid electricity, and as a result, we have seen a
reduction in the associated costs.
Like-for-like usage (UK)
Last year
This year
%change
Electricity (MWh)
11,943
11,412
(4.4)%
The electricity used by our sites in Spain is provided from renewable
sources, partially generated from solar panels fitted to our stores.
Our upcoming stores will also be equipped with solar panels, further
increasing our capability to self-generate green power.
In France, we have certified guarantees of origin from several solar
photovoltaic, wind, and hydroelectric sources.
In January 2023, we signed a new green contract in the Netherlands
covering all sites, and we are currently working on certified green
energy for our sites in Belgium.
Lighting
Over the last five years, we have continued to optimise our UK
lighting consumption. Following the installation of motion-sensitive
LED lighting throughout communal areas, we are now upgrading the
lighting within our larger units. To date, during FY2022/23, we have
replaced the lighting in over 400 storage units. We will continue this
evolution of LED lighting as customers vacate units.
In France, we have completed the internal LED lighting upgrades
and our focus has moved on to all exterior lighting including the
replacement of high consumption fluorescent tubes with motion-
sensitive LED lighting.
Voltage optimisation
Voltage optimisation is a transformer-based technology which
optimises incoming supply from the national grid to match the
voltage required by equipment at an organisation’s premises.
Optimising voltage reduces commercial energy use and costs
as well as lowering carbon emissions.
Last year, we installed voltage optimisation at our largest location, the
Battersea Park store and Business Centre. The return on investment
for Battersea will be calculated after twelve months with a predicted
decrease in electricity demand and a more stable supply to the critical
infrastructure at the site. We plan to install voltage optimisation at our
Liverpool and Bristol Brislington locations.
We continue to monitor advances in technology and any viable
solutions for the future to reduce our electricity usage.
Notes:
1 REGO certificate for UK received by Sustainable Energy First (“SEF”).
2 Listed maximum capacity of PV cells currently installed at existing sites by contractors.
Safestore Holdings plc | Annual report and financial statements 2023
65
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Our environment continued
Sustainable operations continued
Renewable energy continued
Gas
In 2020, we committed to eliminating gas usage by 2030 from our
UK stores; this will be achieved by installing high-output, low-energy
electric heaters, which are more efficient than water radiators reducing
consumption and demand on electricity.
Like-for-like usage (UK)
Last year
This year
%change
Gas (MWh)
2,300
1,862
(49)%
As at the end of October 2023, we had eliminated gas usage in 32
stores. We will work towards our 2030 target by removing gas in at
least five stores per year according to our net zero plan.
The benefits of removing gas from our stores are wide ranging
and include:
• a reduction in the CO2 output attributed to Safestore;
• lower maintenance costs as electric heating systems are
more reliable;
• no requirement for carbon monoxide testing; and
• protection against volatile gas prices.
The gas used in our European stores is for the purposes of heating
reception areas and supplying hot water. Wherever possible, we have
purchased CO2-compensated gas contracts to minimise the impact of
our gas usage whilst we review the option of removing gas.
Minimum Energy Efficiency Standards (“MEES”)
The Energy Efficiency (Private Rented Property) (England and Wales)
Regulations 2015 prohibit landlords from letting a property with an
EPC rating of below E unless an exemption applies. This is relevant to
our UK locations with lettable offices and non self storage space.
The prohibition has applied to new tenancies for residential properties
since 1 April 2020 and has applied to commercial properties from
1 April 2018. Since 1 April 2023, landlords cannot continue to let
properties that fall below an EPC rating of ‘E’. It is currently unlawful
for landlords to grant a new tenancy of or continue to let commercial
property with an EPC rating of ‘F’ or ‘G’. This applies to both new
leases and renewals (unless an exemption applies, and the landlord
has registered that exemption). MEES does not apply to lettings of
six months or less, or to lettings of 99 years or more. From April 2027,
the Government is proposing to change the minimum standard to a
‘C’ rating as an interim step followed by a minimum standard of ‘B’
from 1 April 2030. This has been consulted on but not yet confirmed
by legislation.
Safestore identified 38 locations (storage centres which include lettable
offices and/or non self storage space) where we would have the
requirement to have a MEES energy performance survey conducted.
Since 2021/22, these stores have been surveyed by external
independent assessors and the findings are that the majority are
already compliant with the Government’s proposed 2027 requirements
of a ‘C’ rating. Just seven properties were identified as needing
improvements to meet the 2027 standard, and we are confident that
this can be achieved with modest capital investment. The readiness
of the portfolio for the 2027 standard is a consequence of the work
undertaken to date in the form of LED lighting upgrades, window and
insulation enhancements, and the recent drive to install high efficiency
electric heating.
Merchandise
We are proud to sell Safestore branded merchandise across the UK,
Belgium, the Netherlands, and Spain. Our branded boxes are made
from 100% recycled materials and are fully recyclable. We continue to
offer our ‘box for life promise’, ensuring the boxes can be recycled in a
responsible way.
The use of fully recycled paper across this range, including boxes, has
resulted in the equivalent of 590 trees being saved from being felled
this year1.
We are committed to ensuring our merchandise packaging contains
no single-use or non-biodegradable plastics.
Working with our supplier we endeavour to minimise the carbon
footprint of deliveries with items dispatched from local depots and
distribution centres, including one in Venlo, the Netherlands, for
European distribution to the Netherlands, Belgium, and Spain.
In France, we have updated our range of products to increase
the number of recycled materials, whilst ensuring that items are
fully recyclable.
Uniform
Our uniform supplier processes are accredited by the International
Register of Certificated Auditors (“IRCA”) which audits and inspects
their factories. In addition, their processes are compliant with the
Ethical Trading Initiative (“ETI”).
Note:
1
ECOPAC Corporate Social Responsibility Statement for Sept 2022 to August 2023.
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Safestore Holdings plc | Annual report and financial statements 2023
Waste management
Operational waste
In line with our objectives to ensure minimal waste to landfill in the UK,
we are pleased to confirm that since May 2022, all of our operational
waste in the UK has been diverted from landfill.
Alongside ensuring zero waste to landfill in the UK, we have
issued small in-store containers to help our sites segregate waste
streams, allowing us to responsibly dispose of all items and increase
our recycling.
We actively monitor waste with controls in place to reduce the volume
disposed of at our sites. For example, in France and the UK access to
containers is restricted to prevent third party access. In Belgium, we
are also able to report zero waste to landfill and up to 75% recycling.
We continue to review the scale and impact of operational waste
across the Group, and we are working to minimise the footprint of our
disposal of operational waste.
Like-for-like landfill waste (UK)
Waste (tonnes)
37
0
(100%)
Last year
This year
% change
As our new supplier can support us in maximising diversion from
landfill, we expect to achieve zero operational waste to landfill from
next year in the UK with options for other territories under review.
Water conservation and management
Water
Our stores consume low volumes of water, and we strive to minimise
our consumption wherever possible through the installation of
efficiency schemes such as flow rate restrictors, aerators, and push
button taps.
Like-for-like usage (UK)
Last year
This year % change
Water (cubic meters)
41,570
31,857
(23.4)%
Last year’s usage included volumes associated with a significant leak
of c.6,429m3. On a two-year basis versus 2020/21, usage has reduced
by approximately 11% which better reflects efficiency initiatives and
a return to more ‘normal’ patterns of water usage post pandemic.
Proactive maintenance and reactive responses also mean that the
likelihood and impact of events such as leaks, and associated waste
are mitigated wherever possible.
Across many of our UK stores, we partner with Refill, a campaign to
promote the use of reusable bottles and containers for drinking water.
As a result, Safestore has helped to contribute to saving an estimated
100 million bottles1 from entering our community waste streams.
Note:
1
100 million single-use bottles are estimated to have been saved from entering our waste
stream because of the campaign (https://www.refill.org.uk/about/).
New store development – construction waste and recycling
We carefully monitor our new store construction waste and ensure we
separate waste for recycling where possible.
In the UK, we diverted 100% of our construction waste away from
landfill at our new store build in Morden. Across Europe, we aim to
meet the target of 98% within the next 24 months.
Across all our new store developments in the UK and across Europe,
we are committed to recycling or recovering 100% of all soft and hard
plastics. We continue to work with our suppliers to minimise plastic
packaging arriving onsite and to cut its usage over the coming years.
We aim to remove all such products from our sites by 2030.
Safestore Holdings plc | Annual report and financial statements 2023
67
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Sustainability continued
Our commitment to sustainability continued
Our environment continued
Sustainable construction and sourcing
Safe, sustainable construction
Safestore is committed to ensuring our buildings are constructed
responsibly and their ongoing operation has a minimal impact on
local communities and the environment. This is how we can make
a meaningful contribution towards achieving SDG 12 (Responsible
consumption and production) and SDG 13 (Climate action).
• All our construction teams in the UK and across Europe
follow sustainable construction principles and, wherever
practicable, use materials that have recycled content or are from
sustainable sources.
• Where feasible, concrete from existing buildings on site is demolished,
then crushed on site and re-used in the new development.
• We monitor the waste and energy usage on every site and introduce
efficiencies identified into future building projects.
• We design our stores to provide a safe, secure home for our
customers’ possessions and we build them with consideration
given to our colleagues, our customers, our communities, our
investors, and the environment.
• Over 50% of our new store openings in 2023 were conversions of
existing buildings.
• From the start of 2024, all our new store developments will have
roof-mounted photovoltaic cell systems installed (where structurally/
practically feasible), and electric vehicle charging points will be
provided in the car park for customer and colleague use.
• All new store developments provide bicycle parking for both our
customers and colleagues.
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Safestore Holdings plc | Annual report and financial statements 2023
Energy Performance Certificates (“EPC”) of new
buildings and conversions
Energy Performance Certificates in the UK and their equivalent
in European countries set out the energy efficiency of a property
using a traffic light system of A–G, with A being the most efficient.
Our 2023 target was that 80% of new store developments in the
UK and across Europe (excluding France, where certification of
self storage buildings is not conducted) would achieve a minimum
EPC rating of ‘B’. We are pleased to report all ten relevant new
developments completed and opened in 2023 achieved this rating,
exceeding the set target∆. For further details of energy ratings of 2023
openings including the basis of reporting and independent limited
assurance, see the Sustainability section of our website.
Note:
∆
Deloitte LLP have provided independent limited assurance in accordance with the
International Standard for Assurance Engagements 3000 (ISAE 3000) and Assurance
Engagements on Greenhouse Gas Statements (ISAE 3410) issued by the International
Auditing and Assurance Standards Board (“IAASB”) over the selected metrics identified
with a ∆. Deloitte’s full unqualified assurance opinion, which includes details of the
selected metrics assured, can be found in the Sustainability section of the Group website.
Building Research Establishment Environmental
Assessment Methodology (“BREEAM”) in the
UK, Holland and Spain, and Haute Qualité
Environnementale (“HQE”) in France
BREEAM/HQE certification is a local planning requirement for some
of our new stores in the UK and across Europe. The methodology
assesses the impact and opportunity for enhancing the environmental
aspects of design and construction.
The certification includes a review of new store energy, sustainable
building materials, water efficiency, waste recycling and ecology.
The review also includes social aspects of the building life, including
resource management, health, wellbeing, modes of transport and
pollution reduction.
Regardless of whether a site is BREEAM certified, we strive to build
to a minimum standard of BREEAM ‘Very Good’ on all our new store
developments across the UK and Holland.
During 2023, both our Morden and Ellesmere Port stores achieved a
BREEAM ‘Very Good’ rating.
Safestore construction standards
We have a long-standing commitment to providing both a long term
sustainable investment and a pleasant and safe environment for our
customers and colleagues.
Construction material: recycled content
Typically, the construction of one of our stores may include the following:
Building material
% of build cost
% recycled content
Steel (main frame)
Concrete
4%–5%
3%–4%
Minimum 56%
29%–37%
Cladding (walls and roof)
7%–9%
50% but Kingspan targets
improvement using
recycled bottles by 2030
Our stores are built or converted to achieve similarly high standards;
however, the configuration of an individual store may vary.
Particle board (FSC
certified) (mezzanine floors)
2%
85%
Safestore commitments from 2023/24 onwards are:
Brick and block walls
3%–5%
9%–55%
Glazing
2%
Glass 25%,
Safestore commitment
Applicability
aluminium frames 60%
Best practice – internal/
external expectation
BREEAM/HQE
Equivalent to
‘Very Good’
BREEAM/HQE
Very Good
Sustainable
drainage systems
Solar photovoltaic
Included
Roof-mounted
photovoltaic
Across all new
build stores
Where part of
local planning
Across all new
build stores
PV cell systems
on all new
own build
developments
Considerate Constructors
Scheme (UK only)
Score 40 or higher
All new stores
Ecology
Energy
Security
Energy Performance
Certificate (or equivalent)
Protect existing and
improve biodiversity
Across all new
build stores
Efficient LED
lighting with built-in
motion sensors
Across all existing
and new stores
Operate safe and
secure facility
Across all existing
and new stores
Rated B or higher
All new stores
Hardcore (piling mat)
1%
100%
Considerate Constructors Scheme
(“CCS”) (UK only)
In the UK, construction sites, companies, and suppliers voluntarily
register with the CCS and agree to abide by the Code of Considerate
Practice, which is designed to encourage best practice beyond
statutory requirements.
The scheme’s remit is any area of construction activity that may have
a direct or indirect impact on the image of the industry. The main
areas of concern fall into three categories: the public, the workforce,
and the environment.
We register all new UK-built store developments with the CCS setting
a target score of 40 points for both the shell construction and fitting
out of the facility with our construction management partners.
Our new store in Morden scored an average of 42 out of 45 over
the course of its two visits, putting it in the top bracket of scoring.
The inspector highlighted all areas of the inspections as ‘Excellent’,
which highlights the exceptional effort and commitment that our
construction team makes in raising the standards of our new
store developments.
Construction health and safety
Our health and safety record is excellent. Across all markets, we aim
to exceed minimum standards. Safestore has a robust health and
safety policy, and we have very low incident levels compared with
our peers. During 2023, the number of reportable incidents on our
construction sites was zero.
Consultation process
As part of any local planning process, we consult widely amongst the
community and those most likely to be affected by any development.
Safestore Holdings plc | Annual report and financial statements 2023
69
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Mandatory greenhouse gas (“GHG”) emissions reporting (wholly owned stores only)
This report was undertaken in accordance with the mandatory
greenhouse gas (“GHG”) emissions reporting requirements outlined
under the Companies Act 2006 (Strategic Report and Directors’ Report)
Regulations 2013 (the “2013 Regulations”) and the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018 (the “2018 Regulations”). This requires
Safestore Holdings plc (“Safestore”) to produce a Streamlined Energy
and Carbon Report as per Environmental Reporting Guidelines
(March 2019). This report contains our GHG disclosure for the
2022/23 reporting period.
We have 132 stores in the UK, 29 stores in France, 11 stores in the
Netherlands, 6 stores in Belgium and 10 stores in Spain. During the
2022/23 reporting period we opened stores in Morden and Wigan
(UK). We also opened 6 stores located across Spain.
This report contains the following environmental data for all our
stores which were operational at the beginning of the financial year:
GHG emissions, electricity consumption, electricity transmission and
distribution, gas consumption, water consumption, waste generation
and business travel.
Methodology
Scope of analysis and data collection
Over 2022/23 we have collected primary data for all of our stores,
including: building size (sq ft), electricity consumption (MWh),
electricity transmission and distribution (“T&D”) (MWh losses), gas
consumption (MWh), water consumption (m3), waste generation
(tonnes by waste disposal method) and business travel (mileage).
We do not have any refrigerant leakage to report for any of our stores
in the UK, France, Spain, the Netherlands or Belgium. All primary data
used within this report is from 1 September 2022 to 31 August 2023,
covering the same reporting period as last year. Where electricity, gas
or water consumption data is not available or incomplete, we have
estimated consumption based on a combination of pro-rata methods
as per Environmental reporting guidelines 2019 including:
• pro-rata extrapolation from known reliable data;
• average consumption per sq ft of lettable area of the stores where
we have reliable data; and
• direct comparison using a corresponding period.
KPI selection and calculation
For the purposes of this report stationary energy use (electricity
and gas consumption), water consumption, waste generation, and
business travel have been selected as the most appropriate key
performance indicators (“KPIs”) for the Group. To ensure consistency
in our reporting, particularly where there are differences between the
UK, France, Spain, the Netherlands, and Belgium, we are reporting all
GHG emissions in units of tonnes of CO2e.
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Safestore Holdings plc | Annual report and financial statements 2023
We have used the 2023 GHG conversion factors published annually
by the Department for Environment Food & Rural Affairs (“DEFRA”)
and Department for Energy Security & Net Zero formerly known as
Business, Energy, and Industrial Strategy (“BEIS”) with the exception
of the French, Spanish, Dutch and Belgian CO2e conversion factors
associated with electricity consumption and T&D, which are no longer
published by BEIS. These were sourced from the International Energy
Agency (“IEA”) and Carbon Footprint country specific grid electricity
factors both for Location-based and Market-based emission factors.
GHG emissions scope
The Greenhouse Gas Protocol (the “GHG Protocol”) differentiates
between direct and indirect emissions using a classification system
across three different scopes:
• Scope 1 emissions: includes direct emissions from sources which
Safestore owns or controls. This includes direct emissions from fuel
combustion and industrial processes.
• Scope 2 emissions: covers indirect emissions relating solely to the
generation of purchased electricity that is consumed by the owned
or controlled equipment or operations of Safestore.
• Scope 3 emissions: covers other indirect emissions including third
party-provided business travel.
GHG emissions – scopes included in this report
• Scope 1 emissions: we are reporting our gas consumption and
business mileage.
• Scope 2 emissions: we are reporting our electricity consumption.
• Scope 3 emissions: we are reporting our electricity transmission
and distribution, waste generation and water consumption and
business travel via train and plane. and business travel via train
and plane.
For more details on our basis of reporting for energy and carbon
please refer to the Safestore basis of reporting document as published
on the Sustainability section of our website.
Group environmental performance
We recognise the importance of taking a proactive, strategic approach
to environmental management and we aim to ensure that good
environmental practices are applied throughout our stores, and that
those working for or on behalf of Safestore are aware of the need to
act responsibly and sustainably. Our most significant environmental
impacts arise from the construction of new stores and the operational
energy consumption of our existing stores.
Safestore is committed to the protection of the environment, the
prevention of pollution, and continually improving its environmental
performance. We will comply with all relevant legislation and strive
to exceed legal requirements where possible in order to avoid or
minimise any potential environmental impacts.
The following table displays our total Group performance for electricity, gas and water consumption, waste generation (recycling, landfill, Energy
from Waste), and business travel against the previous years.
Breakdown of consumption by source (2018-2023)
Emissions source
Natural gas
Electricity
Purchased water
Recycling
Landfill
Energy from Waste
Business travel (Scope 1)*
Business travel (Scope 3)**
rail, air, employee vehicle
Units
MWh
MWh
m3
tonnes
tonnes
tonnes
miles
2018/19
(Sep–Aug)
4,136
15,372
55,113
586
44
1,320
2019/20
(Sep–Aug)
3,572
14,435
43,372
1,448
58
1,124
2020/21
(Sep–Aug)
3,686
13,506
47,503
1,487
57
831
2021/22
2021/22
(Sep–Aug)
(restated)
2022/23
(Sep–Aug)
2,742
14,755
53,024
1,517
43
696
2,742
14,755
53,024
277 *
37*
696
2,152
14,708
52,774
233
0
599
396,088
346,076
421,829
469,324
608,381 **
740,770
miles
Not reported
Not reported
Not reported
Not reported
423,570 ***
463,757
Note:
*
2022/23 and 2021/22 (restated) excludes landfill and recycling waste tonnage from Europe – UK operational waste only.
**
2022/23 and 2021/22 (restated) includes mileage in company-owned or operated vehicles throughout the Group. 2020/21 and earlier years includes mileage in company-owned or
operated vehicles in the UK only.
*** Includes business mileage in employee-owned and private hire vehicles in the UK, and via rail and air transport across the Group.
Breakdown of associated GHG emissions by source (2022/23)
0.5% 0.5% 7.6% 10.4% 81.0%
Purchased water
Waste
Business travel
Natural gas
Electricity
Group environmental performance – analysis
We have analysed the year-on-year change in our performance and provided commentary on our Group environmental performance, as below:
Gas performance
We are continually seeking opportunities to reduce energy consumption to the lowest practicable levels appropriate with the operational needs of the business
and to satisfy the needs of our customers. We are phasing out the use of gas in our stores wherever possible and have removed it from five additional sites
during this period, but some of our stores still consume low volumes of gas for heating in reception and office locations. At the design and construction stage
we seek opportunities to design efficient low consuming working environments and are ensuring that all new stores are built and rely just on electricity.
Gas performance
Year ended 31 August
Gas use
Scope 1 emissions
2017/18
2018/19
2019/20
2020/21
2021/22
2022/23 % change
MWh
tCO2e
4,358.3
4,136.2
3,572.0
3,685.5
2,742.0
2,152.0
801.8
760.4
656.8
675.0
500.5
393.7
(21.5%)
(21.3%)
Total gas consumption across all our stores was 2,152 MWh, which is a 21.5% decrease compared with the previous financial year. This
decrease is largely a result of the removal of gas appliance from a further five stores and the full year benefit of stores electrified in FY2022.
Electricity performance
We are continuing to identify opportunities to reduce electricity consumption across our stores.
Recognising that our electricity consumption is predominantly derived from our lighting requirements we have continued a portfolio wide LED
lighting upgrade programme, across all UK stores.
Electricity performance
Year ended 31 August
Electricity use
Scope 2 emissions (LB)
Scope 2 emissions (MB)
Scope 3 emissions
Note:
(LB) – Location Based (MB) – Market Based
2017/18
2018/19
2019/20
2020/21
2021/22
2022/23 % change
MWh
tCO2e
tCO2e
tCO2e
17,416.0
4,376.7
15,373.0
14,435.0
13,506.0
14,755.0
14,708.0
3,527.0
3,022.0
2,555.0
2,620.0
2,803.0
(0.3%)
7.0%
Not reported Not reported
371.4
299.0
171.0
261.0
153.0
228.0
178.0
237.0
47.0 *
(73.8%)
260.0
9.8%
Total electricity consumption across all Group stores was 14,708 MWh which is a 0.3% decrease in consumption compared to the previous year.
Safestore Holdings plc | Annual report and financial statements 2023
71
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Sustainability continued
Our commitment to sustainability continued
Mandatory greenhouse gas (“GHG”) emissions reporting (wholly owned stores only) continued
Electricity performance contined
This saving demonstrates the continued positive impact that lighting installation has had on reducing our consumption. In addition, this
demonstrates that we have been able to decrease our overall electricity use whilst adding new stores and converting stores from gas space and
water heating appliances to high efficiency electric alternatives. Scope 2 location-based emissions increased by 7.0% compared to the previous
year due to the impact of a higher conversion factor for UK electricity generation and the full year inclusion of the Netherlands store portfolio
whose electricity consumption is converted at high conversion factors relative to other Group markets. Scope 2 market-based emissions
reduced by 73.8% compared to the previous year because our France stores switched to a 100% certified renewable supply agreement.
Water performance
Our stores consume very low volumes of water, and we strive to minimise our consumption of water wherever possible through the installation of
efficiency schemes.
Water performance
Year ended 31 August
Water use
Scope 3 emissions
2017/18
2018/19
2019/20
2020/21
m3
tCO2e
61,655
64.9
55,113
58.0
43,372
45.6
47,503
20.0
2021/22
53,024
22.0
2022/23
% change
52,774
19.95
(0.5%)
(10.6%)
Between September 2022 and August 2023 the total water consumption across all our stores was 52,774 m3, which is a decrease of 0.5%.
compared to the previous financial year.
Waste performance
We produce a relatively small amount of operational waste, and we are seeking opportunities to further reduce or avoid the use of natural
resources and minimise waste production by promoting recycling where possible. We continue to improve our waste segregation at our stores
and are actively enhancing our recycling facilities to divert waste from landfill.
This year we report the waste generated from operations in the UK only. Waste from the European markets is excluded due to the difficulty of
separating operational waste from the majority of the waste volume which is customer generated. The prior year has been restated on this same
UK-only basis. Data for 2020/21 and earlier years contains a mix of both operational and customer waste in the UK and France, and is therefore
not comparable with the past two years.
Waste performance
Year ended 31 August
2017/18
2018/19
2019/20
2020/21
2021/22
2021/22
(restated)
2022/23
% change
Waste – recycling
tonnes
1,211
586
1,448
1,488
1,517
277*
233
(15.9%)
Waste – Energy
from Waste
Waste – landfill
Scope 3 emissions
tonnes
tonnes
tCO2e
730
57
47.2
1,321
44.2
45.1
1,124
57.7
81.2
831
56.5
90.0
696
46.0
68.0
696
37.0 *
38.0*
599
0
17.7
(14.0%)
(100%)
(53.4%)
Note:
*
2022/23 and 2021/22 (restated) excludes recycling and landfill waste tonnage from Europe – UK operational waste only.
In the last twelve months to August 2022, a total of 832 tonnes of waste has been generated in the UK (Recycling, Energy from Waste and
Landfill) which is a decrease of 16% compared with the previous year. We continue to work on a Waste Efficiency Programme across our
portfolio to ensure that we have the correct facilities on site to enable our stores to minimise landfill waste and ensure that waste will be recycled
where possible.
Business travel performance
We report on our business travel, which historically was exclusively mileage in company vehicles in the UK (Scope 1). This year we also report business
mileage in company vehicles in France (Scope 1) and mileage in employee-owned vehicles in the UK (Scope 3) as well as travel by air and rail in all
countries (Scope 3). The figures for 2021/22 have been restated to ensure comparability.
Business travel performance
Year ended 31 August
2018/19
2019/20
2020/21
2021/22
2021/22
(restated)
2022/23
% change
Business travel*
miles
396,088
346,076
421,829
469,324
608,381*
Business travel (Scope 1) MWh
440.7
395.4
484.3
518.0
658.0*
Business travel
(Scope 3)**
Scope 1 emissions*
Business travel (PHEV/
EV) Scope 2 emissions
Business travel
Scope 3** emissions
MWh
tCO2e
N/A
108.8
N/A
96.4
N/A
117.7
N/A
124.0
308.0**
159.0*
tCO2e Not reported Not reported Not reported Not reported Not reported
tCO2e Not reported Not reported Not reported Not reported
107.9**
740,770
721.0
311
170.0
6
122
21.8%
9.5%
0.9%
6.8%
13.2%
Notes:
*
For 2022/23 and 2021/22 (restated) this includes mileage in company-owned or operated vehicles throughout the Group and mileage in employee-owned vehicles in the UK. For 2020/21
this includes mileage in company-owned or operated vehicles in the UK only.
**
Scope 3 Business travel emissions includes emissions associated with business mileage in employee-owned and private hire vehicle emissions in the UK, and emissions associated with
rail and air travel across the Group.
72
Safestore Holdings plc | Annual report and financial statements 2023
In our business we travelled 740,770 miles in vehicles in the twelve months to 31 August 2023, resulting in a 21.8% increase compared with the
previous year. This reflects increased a return to pre-pandemic levels of business activity as well as the travel associated with a growing portfolio
of stores in operation or development. We also saw an increase in emissions associated with air and rail travel due to travel associated with the
expanded Group portfolio in Spain, Belgium, and the Netherlands versus last year.
Group GHG performance (mandatory GHG reporting)
We have used the Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance1 and Greenhouse Gas
Protocol2 methodology for compiling this GHG data and, for UK energy consumption and emissions, included the following material GHGs: CO2,
N2O and CH4. In accordance with the BEIS reporting guidelines and data3 conversion factors for Greenhouse Gas emissions, the equivalent
reports on our France, Spain, Netherlands, and Belgium properties used the CO2e factors provided by Carbon footprint4 emission factors
September 2023 edition for Grid Electricity both for Location based and Residual Fuel mix for Market based and Transportation and Distribution
losses (T&D Losses). The business travel miles reported includes company owned or operated vehicles throughout the Group and mileage in
employee-owned vehicles in the UK. We used the following GHG emission conversion factors:
Notes:
1 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/850130/Env-reporting-guidance_inc_SECR_31March.pdf
2 https://ghgprotocol.org/
3 https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2023
4 Source: Carbon Footprint September 2023 Emission Factors (https://www.carbonfootprint.com/international_electricity_factors.html)
UK government GHG emission conversion factors for company reporting
Standard set for 2023 (this set covers the greatest proportion of the current GHG reporting year)
Source: BEIS 2023/Carbon Footprint Sep 23
Scope
Emissions source
1
1
1
1
2
2
2
2
2
2
2
2
2
2
2
2
3
3
3
3
3
3
3
3
3
3
3
3
3
Natural gas (gross CV)
Business travel (petrol)
Business travel (diesel)
Business travel (plug-in hybrid)
UK electricity grid supply
France electricity grid supply (LB)
Spain electricity grid supply (LB)
Belgium electricity grid supply (LB)
The Netherlands electricity grid supply (LB)
UK electricity grid supply (MB)
France electricity grid supply (MB)
Spain electricity grid supply (MB)
Belgium electricity grid supply (MB)
The Netherlands electricity grid supply (MB)
Business travel (plug-in hybrid)
Business travel (fully electric vehicle)
UK electricity transmission and distribution
France electricity transmission and distribution
Spain electricity transmission and distribution
Belgium electricity transmission and distribution
The Netherlands electricity transmission and distribution
Water supply
Water treatment
Commercial waste – recycling
Commercial waste – Energy from Waste
Commercial waste – landfill
Business travel plane (domestic flights)
Business travel train (national rail)
Business travel employee/hire (average diesel)
Unit
kWh
miles
miles
miles
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kWh
miles
miles
kWh
kWh
kWh
kWh
kWh
m3
m3
tonnes
tonnes
tonnes
Pass-km
Pass-km
miles
Conversion factors
0.18293
0.26379
0.27332
0.10601
0.20707
0.05357
0.16372
0.12177
0.29634
0.00000
0.05852
0.00000
0.14427
0.43897
0.04152
0.08116
0.01792
0.00850
0.01337
0.01705
0.04455
0.17700
0.20100
21.28081
21.28081
520.3347
0.272577
0.035463
0.273316
Note:
The conversion factors for electricity (both location based and market based) emission factors were sourced from Carbon Footprint country specific electricity grid GHG Emission Factors,
residual mixes and production mix conversion factor. (Note: Defra/BEIS no longer provides overseas electricity generation conversion factors).
Safestore Holdings plc | Annual report and financial statements 2023
73
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Mandatory greenhouse gas (“GHG”) emissions reporting (wholly owned stores only) continued
Streamlined Energy and Carbon Report (“SECR”) summary
In accordance with the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (“the 2013 Regulations”) and the
Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (”the 2018 Regulations”)
we have reported our Streamlined Energy and Carbon Report disclosure for the previous year 2021/22 and the current year 2022/23.
UK – GHG emissions (tCO2e)
Units
Scope 1
Scope 2 (LB)
Scope 2 (MB)
Scope 3
Total GHG CO2e (LB)
Total GHG CO2e (MB)
GHG CO2e intensity (LB)
GHG CO2e intensity (LB)
GHG CO2e intensity (MB)
GHG CO2e intensity (MB)
tonnes CO2e (UK)
tonnes CO2e (UK)
tonnes CO2e (UK)
tonnes CO2e (UK)
total tonnes CO2e (UK)
total tonnes CO2e (UK)
tonnes CO2e/ floor space (UK - thousand sq ft)
tonnes CO2e / floor space (UK - thousand sq m)
tonnes CO2e/ floor space (UK - thousand sq ft)
tonnes CO2e / floor space (UK - thousand sq m)
2021/22
2021/22
(restated)
2022/23
557
2,415
0
279.8
3,252
837
0.38
4.08
0.10
1.05
557
2,415
0
384 *
3,357
941
0.39
4.22
0.11
1.18
473
2,504
0
371
3,348
844
0.39
4.15
0.10
1.05
Note:
*
2022/23 and 2021/22 Scope 3 figures includes emissions from business travel via public transport (rail, air) and emissions associated with business mileage in employee-owned vehicles.
Europe – GHG emissions (tCO2e)
Units
2020/21
2021/22
(restated) *
2022/23
Scope 1
Scope 2 (LB)
Scope 2 (MB)
Scope 3
Total GHG CO2e (LB)
Total GHG CO2e (MB)
GHG CO2e intensity (LB)
GHG CO2e intensity (LB)
GHG CO2e intensity (MB)
GHG CO2e intensity (MB)
tonnes CO2e (Europe)
tonnes CO2e (Europe)
tonnes CO2e (Europe)
tonnes CO2e (Europe)
total tonnes CO2e (Europe)
total tonnes CO2e (Europe)
tonnes CO2e/floor space (Europe - thousand sq ft)
tonnes CO2e/floor space (Europe - thousand sq m)
tonnes CO2e/floor space (Europe - thousand sq ft)
tonnes CO2e/floor space (Europe - thousand sq m)
68
205
178
48
320
293
0.10
1.08
0.09
0.99
103*
205
178
21**
328
301
0.10
1.08
0.11
0.99
91
299
47
46
439
187
0.13
1.36
0.05
0.58
Notes:
*
2022/23 and 2021/22 include emissions associated with business mileage in company-owned or operated vehicles in France within Scope 1.
** 2022/23 and 2021/22 Scope 3 figures excludes emissions associated with waste in European countries and includes emissions from business travel via public transport (rail, air).
UK – underlying energy use (MWh)
Scope 1
Scope 2
Total Scope 1 and 2
MWh intensity
MWh intensity
Units
MWh (UK)
MWh (UK)
MWh (UK)
MWh/floor space (UK – thousand sq ft)
MWh/floor space (UK – thousand sq m)
Europe – underlying energy use (MWh)
Units
Scope 1
Scope 2
Total Scope 1 and 2
MWh intensity
MWh intensity
MWh (Europe)
MWh (Europe)
MWh (Europe)
MWh/floor space (Europe - thousand sq ft)
MWh/floor space (Europe - thousand sq m)
2020/21
341
2,266
2,606
0.82
8.80
Note:
*
Scope 1 restated to include energy associated with business mileage in company-owned or operated vehicles for France.
2021/22
2,918
12,490
15,408
1.80
19.34
2021/22
(restated)
482 *
2,266
2,747
0.84
9.06
2022/23
2,470
12,093
14,563
1.68
18.05
2022/23
404
2,615
3,019
0.87
9.33
74
Safestore Holdings plc | Annual report and financial statements 2023
GHG emissions
Units
2018/19
2019/20
2020/21
2021/22
2022/23
%change
Scope 1
Scope 2 (LB)
Scope 2 (MB)
Scope 3
Total GHG CO2e (LB)
Total GHG CO2e (MB)
GHG CO2e intensity
GHG CO2e intensity
GHG CO2e intensity
(MB)
GHG CO2e intensity
(MB)
tonnes CO2e (UK, Europe)
tonnes CO2e (UK, Europe)
tonnes CO2e (UK, Europe)
tonnes CO2e (UK, Europe)
total tonnes CO2e (UK,
Europe)
total tonnes CO2e (UK,
Europe)
tonnes CO2e/floor space
(thousand sq ft)
tonnes CO2e/floor space
(thousand sq m)
tonnes CO2e/ floor space
(thousand sq ft)
tonnes CO2e/ floor space
(thousand sq m)
Energy consumed
Units
Scope 1
Scope 2
MWh (UK, Europe)
MWh (UK, Europe)
Total Scope 1 and 2
total MWh (UK, Europe)
MWh intensity
MWh intensity
MWh/floor space (thousand sq ft)
MWh/floor space (thousand sq m)
869
3,527
n/a
402
753
3,022
171
396
4,798
4,171
793
2,555
153
324
3,671
625
2,620
178
327
3,572
2021/22
(restated)
660*
2,620
178
405**
564
2,803
47
420
3,685
3,787
(14.5%)
7.0%
(73.8%)
3.7%
2.8%
n/a
1,320
1,269
1,130
1,243
1,030
(17.1%)
0.50
6.60
0.40
4.90
0.35
3.73
0.12
1.29
0.30
3.27
0.10
1.03
2021/22
3,260
14,755
18,015
1.53
16.48
0.31
0.31
(0.1%)
3.35
3.35
(0.1%)
0.11
0.09
(19.4%)
1.13
0.91∆
(19.4%)
2021/22
(restated)
3,400 *
14,755
18,156
1.53
16.52
2022/23
% change
2,874
14,708
17,582
1.44
15.55
(15.5%)
(0.3%)
(3.2%)
(5.8%)
(5.8%)
Notes:
*
Scope 1 restated to include business mileage in company-owned or operated vehicles in France.
**
∆
Scope 3 business travel via rail and air included for all countries under overall Scope 3 emissions; business mileage in employee-owned vehicles included for the UK. Emission associated
with waste from European countries excluded.
Deloitte LLP have provided independent limited assurance in accordance with the International Standard for Assurance Engagements 3000 (ISAE 3000) and Assurance Engagements
on Greenhouse Gas Statements (ISAE 3410) issued by the International Auditing and Assurance Standards Board (“IAASB”) over the selected metrics identified with a ∆. Deloitte’s full
unqualified assurance opinion, which includes details of the selected metrics assured, can be found in the Sustainability section of the Group website.
Energy efficiency narrative
Through a range of energy efficiency initiatives and a switch to 100% renewable electricity we have reduced our absolute energy use,
with absolute market-based carbon emissions 17% lower than the previous year despite growth in Group floor space.
In our UK wholly owned stores, 100% of our electricity is from renewable energy sources. We have seen a further 4.4% reduction in usage in UK
like-for-like electricity consumption despite replacing some gas heating appliances with electric alternatives in some stores. This is due in large
part to the continued rollout of efficient LED lighting with built in motion sensors across all existing and new stores including customer units as
they become vacant. We also have the added provision of self-generation, reducing our usage at some sites in addition to the benefits of voltage
optimisation at our largest location, Battersea Park.
This year we have also continued our programme of replacement of gas boilers across our estate with more efficient alternative heating sources.
During this financial year we replaced gas appliances in five locations with electric heat pump alternatives, further upgrades are scheduled over
the coming years.
Procurement of renewable energy
We are actively pursuing renewable energy within our purchasing decisions. 100% of our UK electricity consumption in our wholly owned stores
is purchased from Ofgem accredited renewable sources with associated renewable energy certificates. The energy sources that we use include
onshore wind farms and solar fields. Our objective here is to help meet our sustainability goals and to reduce our market-based GHG emissions.
Group GHG performance (mandatory GHG reporting) analysis
Total location-based GHG emissions for Scope 1, Scope 2, and Scope 3 for the twelve-month period to 31 August 2023 have increased by
2.8% to 3,787 tonnes CO2e. Whilst underlying energy use has declined compared to the prior year, the impact of a higher conversion factor for
UK electricity generation and the full year inclusion of Netherlands store portfolio whose electricity is converted at a relatively high conversion
factor has had the effect of increasing location-based emissions overall. However, the Group is primarily focused on reducing its market-based
emissions on its journey to operational net zero by 2035 and has continued to seek certified renewable electricity supply arrangements to this
end. Market-based emissions have reduced by 17% (or by 213 tonnes CO2e) compared to the previous year to 1,023 tonnes of CO2e despite
growth of the Group portfolio. This is due to a combination of initiatives delivered during the year including removal of gas appliances in a number
of UK stores, electricity efficiency via lighting improvements and voltage optimisation, and switching to supply of 100% certified renewable
electricity in France.
Safestore Holdings plc | Annual report and financial statements 2023
75
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Sustainability continued
Our commitment to sustainability continued
Mandatory greenhouse gas (“GHG”) emissions reporting (wholly owned stores only) continued
Group GHG performance (mandatory GHG reporting) analysis continued
Breakdown of emissions scopes 2022/23
Our overall floor space has increased from 11,763,815 sq ft (2021/22) to 12,167,970 sq ft (2022/23).
Our market-based GHG emissions CO2e intensity has decreased from 1.13 tonnes CO2e per 1,000 sq m in 2021/22 (restated) to 0.91 tonnes
CO2e per 1,000 sq m in 2022/23, which is a decrease of 19.4%.
Location-Based
15%
74%
11%
Scope 1
Scope 2
Scope 3
Market-Based
55%
5%
41%
Scope 1
Scope 2
Scope 3
76
Safestore Holdings plc | Annual report and financial statements 2023
Our GHG emissions and intensity since 2015/2016
Location-based (Tonnes CO2e/1,000m2)
Market-based (Tonnes CO2e/1,000m2)
Group floor area (M sq. m)
10,000
)
s
e
n
n
o
T
(
e
2
O
C
l
a
n
o
i
t
a
r
e
p
o
l
a
t
o
T
8,000
6,000
4,000
2,000
0%
7,911
7,864
5,836
4,798
4,171
3,671
3,685
3,787
1,320
1,269
1,243
1.20
1.00
0.80
0.60
0.40
1,030
0.20
0.0
)
m
.
q
s
M
(
a
e
r
a
r
o
o
fl
l
a
t
o
t
p
u
o
r
G
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
Market-based emissions intensity (Tonnes CO2e/1,000 m2)
1.36
1.29
2021/22
(restated)
1.13
2022/23
0.91
Sustainable Energy First (formerly “BiU”) has collated the data set covering Scope 1–3 emissions for the period 1 September 2022 to 31 August 2023.
Sustainable Energy First has direct visibility of the raw data used to calculate ~94% of the total global Scope 1–3 emissions and as such can
provide confirmation on the completeness and accuracy of these emissions as well as around the emissions factors applied, their relevance and
source; reference to these has been provided within this report. Where estimations have been made, these have been noted within this report
and efforts continue to be made to improve the quality of the data used within our annual energy and emissions report.
Safestore Holdings plc | Annual report and financial statements 2023
77
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Corporate governance
Introduction to corporate governance
“The Board is committed to high standards
of corporate governance and decisions are
based on what the Board believes is likely
to be for the benefit of all stakeholders by
promoting and maintaining the long term
success of the Company and its reputation.”
Dear shareholder
On behalf of the Board, I am pleased to introduce the Company’s
corporate governance report for the year ended 31 October 2023.
The Board is committed to high standards of corporate governance
and decisions are based on what the Board believes is likely to be for
the benefit of all stakeholders by promoting and maintaining the long
term success of the Company and its reputation. This review and the
reports of the Nomination, Audit and Remuneration Committees that
follow summarise the key matters considered by the Board during
the year and how it discharges its responsibilities.
Company purpose, values, strategy and culture
Safestore’s purpose is to add stakeholder value by developing
profitable and sustainable spaces that allow individuals, businesses,
and local communities to thrive. This is achieved through the delivery
of our strategy, supported by an effective framework of governance
and risk management and by our culture and values.
Safestore has an open and supportive culture. Our colleague and
stakeholder engagement has been fundamental to our success and
is integral to and aligned with our values and corporate culture.
Our colleague and stakeholder engagement arrangements are set
out on pages 32 to 34 and in the Sustainability report. Our successful
performance is only possible due to the hard work and commitment
of our colleagues, who continue to be engaged with our strategy,
and aligned with our values and our culture. Our high level of
colleague engagement was evidenced by Safestore being awarded
the prestigious Investors in People (“IIP”) Platinum accreditation and
making the final top ten shortlist for the Platinum Employer of the Year
(250+) category in the IIP Awards 2021. This award is explained more
fully on page 48.
The Board is satisfied that our culture is aligned with the Company’s
purpose, values and strategy. Our values are summarised on page 53
and our strategy is explained on pages 8 to 19.
Board priorities
As you would expect in 2023, the Board has focused on delivering its
strategic priorities, investing in its store portfolio and its people, and
refinancing its Revolving Credit Facilities. The Board has continued to
enhance its oversight of environmental risks, employee welfare and
governance. The Board is committed to implementing the relevant
recommendations of the Task Force on Climate-related Financial
Disclosures (“TCFD”) and reports against its framework. We have
made climate-related financial disclosures consistent with the TCFD
recommendations and further details are set out on pages 43 and
59 to 64.
A top priority in 2024 will be the search for a new Chief Financial
Officer and Executive Director, following the announcement in
September 2023 that Andy Jones will be retiring as CFO. The search
and selection process to appoint Andy’s successor remains ongoing.
Board membership
The Company announced in April 2023 that Ian Krieger had
advised the Board that he would not be seeking re-election as a
Non-Executive Director at the Company’s Annual General Meeting, to
be held in March 2024. Ian will therefore be retiring as a Non-Executive
Director, as the Chair of the Audit Committee and as the Senior
Independent Director following the conclusion of the Company’s 2024
Annual General Meeting.
Following ten years as a Non-Executive Director and over nine and
eight years as Chair of the Audit Committee and Senior Independent
Director respectively, Ian has made an exceptional contribution to the
Board and its Committees. On behalf of the Board, I would like to thank
Ian for his invaluable guidance, and we wish him well for the future.
In April 2023, we were also pleased to announce that Jane Bentall
would become Chair of the Audit Committee upon Ian’s retirement.
At the time of drafting, the Board had not met the target set out
in Listing Rule 9.8.6(9)(a)(ii). With Ian set to step down as Senior
Independent Director at the 2024 Annual General Meeting, we are
in the final stages of selecting his replacement for the role and except
to announce our new Senior Independent Director prior to the Annual
General Meeting on 13 March 2024. I can confirm this will be one
of our existing female non-executive directors and we will therefore
meet all of the targets set out in Listing Rule 9.8.6(9)(a).
Following an extensive search process conducted by search firm
Teneo, we were pleased to welcome Avis Darzins to the Board on
1 September 2023 as a Non-Executive Director and as a member
of the Audit and Remuneration Committees. Avis brings a wealth
of experience both from an in-house operational career and as a
consultant, supporting large organisations. Her expertise will be
highly valuable to Safestore as the business continues to expand.
We continue to appoint only the most appropriate candidates to the
Board and our recruitment process in selecting and appointing Board
members is explained in more detail in the Nomination Committee
report on page 87.
78
Safestore Holdings plc | Annual report and financial statements 2023
Compliance statement
The Company is reporting against the UK Corporate Governance
Code 2018 (the “Code”). Throughout the year ended 31 October 2023,
and up to the date of this report, the Company has been in
compliance with the principles and provisions of the Code. The Code
is available on the Financial Reporting Council (“FRC”) website at:
www.frc.org.uk.
2024 Annual General Meeting (“AGM”)
The AGM of the Company will take place at 12 noon on
Wednesday 13 March 2024 at Brittanic House, Stirling Way,
Borehamwood, Hertfordshire WD6 2BT. All Directors will attend
the AGM, which will provide an opportunity for shareholders to hear
more about our performance during the year and to ask questions of
the Board. We will again invite shareholders to submit their written
questions on the business of the 2024 AGM. You will find details of
how to submit written questions in advance of the meeting on our
investor website at https://www.safestore.co.uk/corporate and in
the Notice of the 2024 AGM.
David Hearn
Non-Executive Chairman
16 January 2024
Equality, Diversity and Inclusion
I am delighted that the Board has met its ethnic and gender diversity
targets; at the date of this report, the Board comprises 44% women
(FY2022: 38%). However, the pace of change for diversity in the senior
leadership team is slower than we would like. The Board is keen to
encourage more women at Safestore, at all levels, and our aim is
to attract 40% female applicants for every role. In addition, we are
working hard on attracting, retaining, and supporting women in our
workforce and we know that there is still an under-representation
of black, Asian and ethnic minority colleagues in higher paid roles.
In 2023 the Board adopted a Board Diversity Policy, covering diversity
targets and the board’s approach to inclusivity. The Board Diversity
Policy is available on the Company’s website. For more information on
gender and ethnic diversity across the Group, details of the Company’s
equality, diversity and inclusion policy and the gender and ethnicity
balance of senior managers and direct reports, please see page 50.
Board evaluation
Each year, the Board undertakes a formal evaluation of its
effectiveness. During 2023, an internally facilitated evaluation of
the Board and its Committees was carried out. The evaluation was
conducted by the Chairman, and facilitated by the Company Secretary
using a detailed questionnaire alongside opportunities for additional
comments, which was completed by each Board member. The results
arising from the evaluation were discussed by the whole Board.
Notwithstanding that the report considered that the Board’s
performance was strong, a number of actions were identified to
further enhance the Board’s effectiveness, and further details of
these may be found on pages 83 and 84.
2023 Directors’ Remuneration Policy
Following an extensive shareholder consultation programme
with most of our major shareholders and investor bodies, the Board
was delighted to receive 97.4% shareholder support for Safestore’s
2023 Directors’ Remuneration Policy (the “Policy”), when approved
by shareholders at the Company’s General Meeting held in July 2023.
The new Policy has been designed to operate for three years, and
is summarised on pages 99 to 102. I would like to thank our
major shareholders on behalf of the Board for their engagement,
constructive feedback and support.
Safestore Holdings plc | Annual report and financial statements 2023
79
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Board of Directors
as at 16 January 2024
David Hearn
Non-Executive Chairman
N
R
Commenced role
1 January 2020 (appointed to the
Board and as a member of the
Remuneration Committee on
1 December 2019 and appointed
as Nomination Committee Chair on
1 January 2020)
Skills and experience
David Hearn is an experienced chair
and brings a wealth of international
board and senior executive experience
in public companies, having previously
been CEO of leading consumer goods
businesses Goodman Fielder in
Australasia, United Biscuits in Europe
and Asia, Cordiant plc in the US and
the UK and also international private
equity and advisory firm Committed
Capital. Until recently David was chair
of The a2 Milk Company, a company
listed on the New Zealand Stock
Exchange and dual listed on the
Australian Stock Exchange.
External appointments
David is chair of Tate & Lyle PLC and a
director of Lovat Partners, Committed
Capital and the architectural firm
Robin Partington & Partners.
Frederic Vecchioli
Chief Executive Officer
Commenced role
September 2013
Skills and experience
Frederic Vecchioli founded our French
business in 1998 and has overseen its
growth to 29 stores in Paris operating
under the ‘Une Pièce en Plus’ brand.
He joined the Group as President and
Head of French Operations following
the Mentmore acquisition in 2004.
Andy Jones
Chief Financial Officer
Commenced role
May 2013
Skills and experience
Andy Jones joined the Group in May
2013 as Chief Financial Officer. Andy’s
previous role was director of group
finance at Worldpay Limited, prior to
which he held the positions of director
of finance and investor relations at TUI
Frederic was appointed to the Board
in March 2011 and became Chief
Executive Officer of the Group in
September 2013.
External appointments
None.
Travel plc, and chief financial officer at
Virgin Entertainment Group in the US.
Andy began his career at Ernst &
Young, where he qualified as a
chartered accountant in 1992.
Andy is a graduate of the University
of Birmingham.
External appointments
None.
Ian Krieger
Senior Independent Director
A
N
R
Commenced role
March 2015 as Senior Independent
Director. Ian Krieger will retire as a
Non-Executive Director of the Company
following the conclusion of the Company’s
2024 Annual General Meeting.
Skills and experience
Ian Krieger joined the Board in
October 2013 as a Non-Executive
Director and was appointed Chair
of the Audit Committee in April 2014
and Senior Independent Director
in March 2015. Ian is a chartered
accountant and was a senior partner
and vice-chair at Deloitte until his
retirement in 2012. Ian brings a wealth
of recent financial experience to the
Board as well as his experience as
senior independent director and audit
committee chair for two other UK-listed
companies in the property sector.
External appointments
Ian is a non-executive director of
Capital & Regional plc and Primary
Health Properties plc.
Laure Duhot
Non-Executive Director
R
Commenced role
November 2021 (appointed as Chair of
the Remuneration Committee in
June 2022)
Skills and experience
Laure Duhot brings over 30 years of
senior executive level experience in
the investment banking and property
sectors, specialising in alternative
real estate assets, and has been a
non-executive director at a number
of funds and property companies.
Laure started her career in the
investment banking sector and has
developed a focus on the property
sector. She has held senior roles at
Lehman Brothers, Macquarie Capital
Partners, Sunrise Senior Living Inc.,
Pradera Limited and Grainger plc,
and latterly was head of investment
and capital markets – Europe
at Lendlease.
External appointments
Laure is currently a non-executive
director of Primary Health Properties
plc and NB Global Monthly Income
Fund Limited, a premium-listed
Guernsey registered fund. Laure is
also a director of Lifestory Group
Limited and acts as the independent
member on CBRE-IM’s UK
investment committee.
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Safestore Holdings plc | Annual report and financial statements 2023
Gert van de Weerdhof
Non-Executive Director
Commenced role
June 2020
A
R
N
Skills and experience
During his extensive and varied
career, Gert van de Weerdhof has
held a number of senior executive
positions including as CEO of
GrandVision Europe BV before
progressing to become chief retail
officer for Esprit Holdings Ltd and
latterly as CEO of RFS Holland
Holdings BV and its subsidiary
Wehkamp BV. Gert has been a
non-executive director, for Wereldhave
NV, and Accell Group NV, and chair of
CTAC NV. Gert brings a wealth of
international expertise to the Board
having held roles across multi-site
retail, e-commerce, consumer goods
and real estate.
External appointments
Gert is currently CEO of Mercy Ships
and non-executive director of Sligro
Food Group NV, a company listed
on Euronext Amsterdam.
Delphine Mousseau
Non-Executive Director
Commenced role
November 2021
R
Skills and experience
Delphine Mousseau brings over
25 years of senior executive level
and consultancy experience in
e-commerce and customer
engagement across Europe,
specialising in retail.
Delphine began her career as a
project manager at the Boston
Consulting Group before moving on to
join Plantes-et-Jardins.com where she
became head of operations. Between
2007 and 2011, she was director of
e-commerce for Europe at Tommy
Hilfiger and then became an
independent consultant, primarily for
the former Primondo Specialty Group
which was Carlyle owned.
Latterly Delphine was a VP markets at
Zalando and a non-executive director
of Fnac-Darty SA.
External appointments
Based in Germany, Delphine is
currently non-executive director at
Aramis Group SAS, listed on Euronext
Paris, and a member of the Holland
& Barrett UK board and chair of the
Refurbed board in Austria.
Jane Bentall
Non-Executive Director
Commenced role
May 2022
A
R
Skills and experience
Jane Bentall has extensive experience
and understanding of operating
multi-site, consumer-led businesses.
Most recently, Jane was managing
director of Haven, the UK holiday
parks chain and largest business
division of Bourne Leisure. Prior
to becoming managing director
Avis Darzins
Non-Executive Director
Commenced role
September 2023
A
R
Skills and experience
Avis Darzins has over 20 years of
senior executive level and management
consulting experience in the retail and
entertainment and media sectors,
specialising in customer experience
strategy and business transformation.
of Haven, she was the group chief
financial officer for twelve years
and previously spent six years as
operations director. In her career she
has also held senior financial roles
at the Rank Group.
External appointments
Jane is a director of Oakman Inns plc,
and a non-executive director of
The Royal Marsden NHS Foundation
Trust. Jane is also a director of
Avis began her career in the retail
sector covering domestic and
international B2B and B2C sales and
buying and category management
before specialising in large-scale
change programmes. Before joining
Sky PLC in 2009 as business
transformation director, Avis spent
eight years at Accenture, having been
promoted to partner in 2004. Avis was
a non-executive director of Moss Bros
Group plc, until its sale in 2020.
Resident Hotels Limited, a
consultant for Blackstone, and
a member of Pilotlight.
Jane is an ACA qualified accountant
and a fellow of the Institute of
Chartered Accountants.
More recently Avis has established her
own business consulting company.
External appointments
Avis is a non-executive director for
Marshalls plc and Grafton Group plc,
and the senior independent trustee/
director for the children’s charity
Barnardo’s.
Committee membership
Chair of Committee
A Audit Committee
N Nomination Committee
R Remuneration Committee
Safestore Holdings plc | Annual report and financial statements 2023
81
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Corporate governance
Our purpose: to add stakeholder value
by developing profitable and sustainable
spaces that allow individuals, businesses,
and local communities to thrive
Leadership
The role of the Board
The Board is collectively responsible for promoting the long-term
sustainable success of the Company and its reputation, for the benefit
of its stakeholders.
The Board is responsible for setting:
• the Company’s purpose, its values and strategy, and satisfying itself
that these are aligned with the overall culture of the Group;
• appropriate performance targets for management and monitoring
the business’ performance against those targets; and
• the Group’s risk appetite and satisfying itself that financial controls
and risk management systems are robust, while ensuring the Group
is adequately resourced.
The Board also ensures that there is appropriate dialogue with
shareholders on strategy and remuneration.
The Board is collectively responsible for promoting the long term
success of the Group for the benefit of the Company’s stakeholders.
It agrees the overall strategy, direction and culture of the Group and
has the powers and duties set out in the Companies Act 2006
(the “Act”) and the Company’s Articles of Association.
The Board delegates certain matters to the Board Committees
and delegates the day-to-day operation of the business to the
Executive Directors.
The Board’s activities during the year and how it discharges its
responsibilities can be found on page 84 and 85. The Group’s
established strategy has evolved to embed sustainability within its
purpose. Our strategy is underpinned by our values, as defined on
pages 4 and 53, our behaviours and our governance structure, which
shape our culture and remain central to the way we conduct our
business. The culture of the business is a key part of our success.
The Non-Executive Directors are responsible for providing
constructive challenge to the Executive Directors, assisting in
developing proposals on the Group’s strategy and monitoring
the performance of the Executive Directors against strategic
and operational objectives.
The Board has delegated certain responsibilities to its Audit,
Remuneration and Nomination Committees. Each Board Committee
has defined terms of reference, which can be found online within the
Governance section of the Company’s website: www.safestore.com.
The activities of each Board Committee are set out in separate
sections of this report. The Audit Committee is, in turn, supported by
the Risk Committee, which is a management committee, chaired by
the Chief Financial Officer.
The Board also has an established Standing Committee and a
Disclosure Committee, which are sub-committees of the Board and
meet as required. The Standing Committee has delegated authority to
approve routine matters such as matters relating to the operation of
the Company’s share scheme arrangements, and any other matters,
which may be expressly delegated to it by the Board from time to
time. The Disclosure Committee has delegated responsibility for
overseeing the disclosure of information by the Company to meet its
obligations under the Market Abuse Regulation.
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Safestore Holdings plc | Annual report and financial statements 2023
All Committees and all Directors have the authority to seek information
from any Group colleague and to obtain professional external advice
if they feel necessary.
Implementation of agreed plans, budgets and projects in pursuit of the
Group’s strategy and the actual operation of the Group’s system of
internal control and risk management are delegated to the Executive
Directors, who are supported by an Executive Team. This includes
implementing Group strategy to optimise the trading performance of
the existing store portfolio, to monitor financial performance and
maintain a strong and flexible capital structure, to identify selective
portfolio and expansion opportunities, to develop our colleagues and
to implement the Group’s sustainability strategy. Sustainability
governance is explained more fully on page 46.
The Board and its independence
At the date of this report, the Board consists of nine Directors,
the Chairman, two Executive Directors and six independent
Non-Executive Directors, with Ian Krieger appointed as current
Senior Independent Director until the 2024 Annual General Meeting.
The Chairman was considered to be independent on appointment.
The skills and experience of each of the Directors, along with the
dates they commenced their role, are set out on pages 80 and 81.
Both on an individual and collective basis, the Directors have the
skills, understanding, experience and expertise necessary to ensure
the effective leadership of the Group. At least half of the Board,
excluding the Chair, are independent. The Board monitors the
independence of its Non-Executive Directors. The Board is aware
of the other commitments of its Directors and is satisfied that these
neither conflict with their duties, nor impact their independence or
time commitment as Non-Executive Directors of the Company.
The Board is mindful that the Code lists that where non-executive
directors hold cross-directorships or have significant links with other
directors through involvement in other companies or bodies, this is
likely to impair, or could appear to impair, a non-executive director’s
independence. Accordingly when assessing the independence of
Laure Duhot and Ian Krieger, it was noted that both Laure and Ian
serve as independent non-executive directors of Primary Health
Properties plc (“PHP”), a UK listed company. They are not involved
in executive duties for PHP and each has a similar obligation to be
independent for PHP as they do for the Company. The Board
does not consider that Laure and Ian’s positions as independent
Non-Executive Directors of the Company are adversely impacted by
their roles on the board of PHP and is satisfied that, notwithstanding
these appointments, they are therefore regarded as independent.
Ian Krieger will be stepping down from the Board at the 2024
Annual General Meeting, at which point there will be no instances
of cross-directorships on the Board.
The Board is also mindful that non-executive director tenure that
exceeds nine years is also listed by the Code as a circumstance that
is likely to impair, or could appear to impair, a non-executive director’s
independence. Ian Krieger was appointed to the Board in October 2013.
Having undertaken a rigorous review of Ian’s performance as a
Non-Executive Director and having taken into account other relevant
factors that might be considered likely to impair, or could appear to
impair, independence including as set out in Provision 10 of the Code,
the Board considers that Ian has remained independent during the
year under review.
In April 2023, the Company announced that Ian had advised his
intention to retire as a Non-Executive Director of the Company
following the conclusion of the Company’s 2024 Annual
General Meeting.
Board meetings held in 2022/23
Attendance of the individual Directors of the Board at meetings that
they were eligible to attend during the financial year is shown in the
table below:
Director who served during the year ended
31 October 2023
Number of
meetings held
during tenure
during the year
Number of
meetings
attended
David Hearn
Frederic Vecchioli
Andy Jones
Ian Krieger
Gert van de Weerdhof
Laure Duhot
Delphine Mousseau
Jane Bentall*
Avis Darzins**
11
11
11
11
11
11
11
11
1
11
11
11
11
11
11
11
10
1
Note:
*
Jane Bentall missed a Board meeting due to a family medical emergency.
**
On 1 September 2023, Avis Darzins was appointed as an independent
Non-Executive Director.
In addition to the scheduled Board meetings, the Standing Committee
met on 20 occasions and was granted express delegation by the Board
to approve the full year and half year results announcements and
ancillary matters, including the Company’s new financing arrangements.
The Standing Committee also approved routine administrative matters
which related to the maturity of the Company’s Sharesave schemes,
and vesting of the Company’s Long Term Incentive Plans, the grant of
new options under the 2023 (three-year) Sharesave scheme and the
Company’s new financing and intercompany funding arrangements.
The Disclosure Committee has not met during the year.
2023 Board and Committee evaluation
The Board recognises that it continually needs to monitor and improve
its performance. This is achieved through annual Board effectiveness
reviews, full induction of new Board members and ongoing Board
development activities. Each year the Board conducts an
effectiveness review and every three years the review is carried out
externally. An external evaluation was completed in 2022.
This year the Board carried out an internal evaluation of its
performance, its Committees and individual Directors. The scope
was agreed with the Chairman and was facilitated by the Company
Secretary. Directors were invited to complete a detailed questionnaire
alongside opportunities for additional comments, which was
completed by each Board member. The questionnaire covered
a number of key areas, including strategy, succession planning,
Board size, composition and balance of skills, risk management and
the relationship between the Board and management. The responses
were considered by the Chairman and were collated and shared with
the Board. The Chairman discussed the outcome of the evaluation
with each Director and shared his findings with the Board.
The anonymity of respondents was ensured throughout the evaluation
process in order to promote an open and frank exchange of views.
Each Non-Executive Director continues to bring independent
judgement to the Board’s decision-making process. Frederic Vecchioli
is also a director of the group of companies that forms the Joint
Venture group structure operating in Germany, which includes
companies incorporated in Germany and Luxembourg and that are
associated companies of the Group; apart from these appointments
the Executive Directors do not hold any executive or non-executive
directorships in other companies.
Division of responsibilities
The roles of Chairman, Chief Executive Officer and Senior
Independent Director are separate and clearly defined, with the
division of responsibilities set out in writing and agreed by the Board.
The Chairman is responsible for the management of the Board and
for aspects of external relations, while the Chief Executive Officer has
overall responsibility for the management of the Group’s businesses
and implementation of the strategy approved by the Board. The Senior
Independent Director is also responsible for supporting the Chairman
on all governance issues. The statement of the division of responsibilities
between the Chairman, the Chief Executive Officer and the Senior
Independent Director is available on the Governance section of the
Company’s website: www.safestore.com.
Formal workforce advisory panel
Our ‘Make the Difference’ people forum, launched in 2018, is a formal
workforce advisory panel. The Board approved the establishment of
the advisory panel to facilitate engagement between colleagues
from different areas of the business and provide a two-way feedback
process between the Board and our colleagues. The panel has
terms of reference that define its purpose and has a mechanism for
appointing colleague representatives, known as ‘People Champions’.
Further information relating to the panel and our ‘People Champions’
can be found on page 11. The Board receives regular feedback
from the panel which has resulted in the Board approving outcomes
as detailed in the Sustainability report on page 50 and Directors’
remuneration report on pages 96, 102 and 106. The Chief Executive
Officer attends panel meetings twice a year to report the views of the
Board and to provide regular updates covering the Group’s performance
and the delivery of our strategy. The Board considers the formal
workforce advisory panel to be effective.
Effectiveness
Activities of the Board
The Board scheduled eight meetings during the financial year, with
three further Board meetings arranged as required. The Board has
held a mix of meetings either in person or by video conference,
and held one meeting at the Group’s office in Paris.
The Board has a formal schedule of matters specifically reserved for
its decision, which includes (amongst other things) various strategic,
financial, operational and governance responsibilities. A summary of the
key activities of the Board during the year, in accordance with the formal
schedule of reserved matters, can be found on pages 84 and 85.
The services of the Company Secretary are available to all members
of the Board. Board minutes are circulated to all Board members.
There is also regular informal contact between Executive and
Non-Executive Directors to deal with important matters that arise
between scheduled Board meetings. A separate meeting for
Non-Executive Directors is held at least once in every year.
Appropriate directors’ and officers’ insurance cover is arranged by the
Group through its insurance brokers and is reviewed annually.
Safestore Holdings plc | Annual report and financial statements 2023
83
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Corporate governance continued
Effectiveness continued
2023 Board and Committee evaluation continued
Notwithstanding that the report considered that the Board’s
performance was strong, the evaluation provided constructive
feedback and identified opportunities for development and growth.
The Board undertook to develop an action plan to address particular
areas of interest, with a focus on improving the Board and its
Committees, effectiveness and develop efficiencies together with
the executive function to enable Directors to prioritise strategic
progression and generating shareholder value.
The results of the Board evaluation confirmed that the Board
continues to function effectively to a high standard.
The Board members were seen as engaged and committed while the
Board’s culture remains open, respectful and constructive.
The content for any subsequent effectiveness reviews will be designed
to build upon insights gained in the previous exercise to ensure that
the recommendations agreed in the review have been implemented
and that year-on-year progress is measured.
The Chairman reviewed the performance of the Chief Executive
Officer and the Non-Executive Directors. The Chief Executive Officer
reviewed the performance of the Chief Financial Officer, and this year,
the Chairman’s own performance was assessed by the Senior
Independent Director after seeking and receiving feedback from
each of the other Directors.
A summary of the key matters considered by the Board during the year
Responsibilities Activities
Strategy
• The development and implementation of the Company’s strategy included general updates from the CEO and CFO.
Performance
and operational
matters
• Presentations from members of the management team on strategy implementation in their operations.
• Considered selective portfolio management and expansion opportunities, which included the establishment of a new
Joint Venture arrangement with Carlyle in Germany, and site acquisitions in the UK, France, Spain and Benelux.
• Reviewed the 2023 performance against budget and updated forecasts for the UK, French, Spanish and
Benelux operations.
• Reviewed customer performance data.
• Maintained a detailed focus on full year earnings guidance.
• Approved the 2023 Board budget.
• Reviewed and approved the Group’s investment appraisal policy.
• Received regular operational updates from members of the management team, relating to property, colleagues,
marketing, IT, store operations, Company secretarial and legal matters.
Finance and
capital
• Reviewed the Group’s capital structure and approved the arrangements for the Group’s new £400 million unsecured
multi-currency Revolving Credit Facility and agreed to extend the facility by a further one year to November 2027.
• Monitored the Company’s going concern and long term viability statements.
• Reviewed cash flow, dividend policy (in line with the UK REIT requirements) and shareholder returns.
People, culture
and values
• Received regular updates on colleague wellbeing and HR matters, including updates on colleague engagement and
updates from our ‘Make the Difference’ people forum, our formal workforce advisory panel.
• Reviewed and approved the Group’s key policies including the Company’s Modern Slavery Act Statement, anti-corruption and
bribery statement and policy, the whistleblowing (“Speak Out”) policy and the health and safety policy statement.
• Considered and reviewed the gender pay gap report for 2022.
• Reviewed the Company’s sustainability strategy, including the Company’s commitment to working towards operational
carbon neutrality (net zero) by 2035.
• Reviewed colleague engagement arrangements.
Governance
and risk
• Approved changes to Board composition, and considered Director independence, and succession planning.
• Approved an increase in Non-Executive Director fees, in line with overall general increases to all colleagues.
• Reviewed reports on governance and legal issues.
• Considered the Company’s risk appetite in relation to its strategy.
• Reviewed the outcome of the Board and its Committees’ 2023 Board effectiveness review.
• Reviewed the Directors’ Conflict of Interests Register.
• Monitored and reviewed the Company’s Risk management and internal control system. (See Audit Report for more details
on effectiveness).
Shareholder
and stakeholder
engagement
• Discussed feedback from investors’ and analysts’ meetings following the release of our full year and half year results
announcements and interim management statements and meetings with existing and potential shareholders.
• Discussed feedback following the Chairman and Chair of the Remuneration Committee’s engagement with major
shareholders ahead of submitting the Company’s 2023 Directors’ Remuneration Policy to shareholders for approval at the
General Meeting held in July 2023.
• Received regular updates from brokers and advisers on the market perception of Safestore.
• Received updates from the CEO and CFO on stakeholder engagement in relation to investor and partner engagement.
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Safestore Holdings plc | Annual report and financial statements 2023
Responsibilities Activities
Other
• Approved the Annual Report and Financial Statements and recommended the final dividend in line with the Company’s
dividend policy for shareholder consideration.
• Approved the 2023 half year results announcement and declared the interim dividend in line with the Company’s
dividend policy.
• Approved the interim management statements in November 2022 and February and September 2023 regarding trading updates.
• Received and reviewed monthly shareholder analysis reports.
Accountability
Risk management and internal control
A summary of the principal risks and uncertainties within the business
is set out on pages 35 to 40.
The Board retains overall responsibility for setting Safestore’s risk
appetite and establishing, monitoring and maintaining the Group’s risk
management and internal control systems. These systems are
designed to enable the Board to be confident that such risks are
mitigated or controlled as far as possible, although no system can
eliminate risk entirely.
The Board has established a number of ongoing processes to identify,
evaluate and manage the strategic, financial, operating and compliance
risks faced by the Group and for determining the appropriate course
of action to manage and mitigate those risks. The Board delegates the
monitoring of these internal control and risk management processes
to the Audit Committee. These measures have been in place
throughout the year and up to the date of this report.
The Risk Committee supports the Group’s risk management strategy
and undertakes regular reviews of the formal risk assessments and
reports regularly to the Audit Committee of the Board. The Risk
Committee is chaired by the Chief Financial Officer and comprises
representatives from the Operations, Finance, Human Resources and
Property functions. Risk management remains an ongoing
programme within the Group and is formally considered at operational
meetings as well as at meetings of the Board.
As reported last year, during the year ended 31 October 2023, the
Group employed a Head of Internal Audit in the UK supported by three
auditors responsible for reviewing operational and financial controls
across the UK, France, Spain, Belgium, the Netherlands and
Germany. The internal audit team operates with a mandate to provide
assurance that the stores’ risk management and control processes
operate effectively. The Head of Internal Audit reports to the Chief
Financial Officer and the Chair of the Audit Committee. Further details
are provided in the Audit Committee report.
During the financial year, the Board has directly, and through
delegated authority to the Audit and Risk Committees, overseen
and reviewed the performance and evolution of risk management
activities and practices and internal control systems within the Group.
Through both its ongoing involvement in and overview of risk management
and internal control activities, the Board is satisfied that there have
been no significant failings or weaknesses identified and the Directors
believe that during 2023 the system of internal control has been
appropriate for the Group.
Board appointments
Each decision to appoint further Directors to the Board is taken by the
entire Board in a formal meeting based on a recommendation from the
Nomination Committee. The Nomination Committee consults with
financial and legal advisers and uses the services of external
recruitment specialists. New members of the Board are provided with
initial and ongoing training appropriate to individual needs in respect
of their role and duties as Directors of a listed company.
During the year the Nomination Committee engaged in a rigorous
search for a new Non-Executive Director. The process for identifying
and overseeing the appointment of the new Non-Executive Director
has been explained in the Nomination Committee report on page 87.
Board development
The Chairman is responsible for ensuring that all Non-Executive Directors
receive ongoing training and development. Our Non-Executive Directors
are conscious of the need to keep themselves properly briefed and
informed about current issues. Specific and tailored updates are
provided at Board meetings and to members of the Audit Committee
and have included presentations from the Company’s advisers.
There is a procedure to enable Directors to take independent legal
and/or financial advice at the Company’s expense, managed by the
Company Secretary, if they feel necessary to carry out their duties as
a Director fully. No such independent advice was sought in 2023.
During the year the Company has delivered an induction programme
for Avis Darzins which has been led by the Chief Executive Officer.
The induction programme has been prepared to ensure that it
provides a comprehensive introduction to the Group as a whole.
Appointment terms and elections of Directors
All Directors have service agreements or letters of appointment and
the details of their terms are set out in the Directors’ remuneration
report on page 121. The service agreements of the Executive
Directors and letters of appointment of the Non-Executive Directors
are available for inspection at the Company’s registered office during
normal business hours, including the 15 minutes immediately prior to
the AGM. The letters of appointment for Non-Executive Directors are
in line with the provisions of the Code relating to expected time
commitment. At each AGM of the Company, all Directors will stand for
re-election in accordance with the Code and the Company’s Articles
of Association. The Company’s Articles of Association require that a
Director appointed during the preceding year should be subject to
election at the Company’s next AGM.
Directors’ conflicts of interest
The Company’s Articles of Association give the Directors the power to
consider and, if appropriate, authorise conflict situations where a
Director’s declared interest may conflict or does conflict with the
interests of the Company.
Procedures are in place at every meeting for individual Directors
to report and record any potential or actual conflicts which arise.
The register of reported conflicts is reviewed by the Board at least
annually. The Board has complied with these procedures during
the year.
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Corporate governance continued
Accountability continued
Budgetary process
A comprehensive budgeting process is in place, with an annual
budget prepared and validated at a country and functional level.
The budget is subject to significant consideration and approval by the
Board. The Directors are provided with relevant and timely information
required to monitor financial performance.
Investment appraisal (including acquisitions)
Budgetary approval and defined authorisation levels regulate capital
expenditure. Acquisition activity is subject to internal guidelines
governing investment appraisal criteria, financial targets, negotiation,
execution and post-acquisition management.
Company ethics and whistleblowing
The Company is committed to the highest standards of integrity and
honesty and expects all colleagues to maintain the same standards in
everything they do at work. The Company recognises that effective
and honest communication is essential to maintain its business values
and to ensure that any instances of malpractice are detected and
dealt with.
The Company has a number of policies available online for its
colleagues. These include a code of conduct, an anti-bribery and
corruption policy, a receipt of gifts and corporate hospitality policy and
a whistleblowing (“Speak Out”) policy. The anti-bribery and corruption
policy reinforces the Group’s commitment to countering bribery, tax
evasion and corruption as it seeks to comply with the Bribery Act
2010 and the Criminal Finances Act 2017.
The Speak Out policy has procedures for disclosing malpractice and,
together with the code of conduct, is intended to act as a deterrent to
fraud or other corruption or serious malpractice. It is also intended to
protect the Group’s business and reputation.
No whistleblowing issues were reported during the year.
The Board considers the payment of taxes as a responsibility that
brings positive socio-economic impacts through its presence and
employment creation in the countries it operates in. A Group tax
strategy has been in place since 2016, which is approved by the
Board and reviewed annually by the Audit Committee and is available
on the Group’s website: www.safestore.com. It is the Group’s policy to
pay the right amount of tax wherever it does business, based on a fair
and sound application of local tax laws to the economic substance of
its business transactions. Safestore does not use artificial tax
avoidance schemes or tax havens to reduce the Group’s tax liabilities.
Investor relations and shareholder and
investor engagement
We are committed to proactive and constructive engagement with all
our shareholders and consider all shareholders’ views as part of the
Board’s decision-making process. The Group places a great deal of
importance on communication with its shareholders and maintains a
dialogue with the investment community. Engagement is maintained
through a comprehensive investor relations programme, which
includes formal presentations of the full year and half year results,
meetings with institutional investors and analysts as required and
attendance at investor conferences. The presentation slides used at
these meetings are made available on the Company’s website and
accessible for all shareholders. The Board ensures that our
shareholders, investors and investor community have a strong
understanding of our strategy, performance and culture.
Demonstrating our commitment to full transparency and engagement
with our shareholders during this year the Chairman and Chair of the
Remuneration Committee engaged extensively with most of our major
shareholders and Investor Bodies in relation to our remuneration
strategy and our 2023 Remuneration Policy (the “Policy”). The Board
would like to thank shareholders for showing their overwhelming
support for our new Policy at our General Meeting held in July 2023.
To ensure all Board members share a good understanding of the
views of all our shareholders, the Board receives regular updates on
the views of our shareholders and receives summaries of institutional
investor comments following meetings on the full year and half
year results.
In the event that shareholders have any concerns, which the normal
channels of communication through the Chief Executive Officer or
Chief Financial Officer have failed to resolve or for which such contact
is inappropriate, our Chairman or Senior Independent Director are
available to address such concerns. Both make themselves available
when requested for meetings with shareholders on issues relating to
the Company’s governance and strategy.
The Board considers the Annual Report and Financial Statements,
the AGM and its website to be the primary vehicles for communication
with private investors. All shareholders are invited to the Annual General
Meeting and can raise any comments they may have throughout the
year via our IR inbox, which is published on our website. Resolutions
at the Company’s AGM are proposed on each substantially separate
issue and the Company indicates the level of proxy voting lodged in
respect of each resolution. The AGM gives all shareholders who are
able to attend (especially private shareholders) the opportunity to ask
questions of the full Board of Directors, including the Chairs of the
Audit, Nomination and Remuneration Committees.
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Nomination Committee report
“The Board, on the advice of the
Committee, recommends the election
or re‑election of each Director.”
David Hearn
Chair of the Nomination Committee
Meetings held in 2022/23
Members of the Committee during the year
ended 31 October 2023
David Hearn (Chair)
Ian Krieger
Gert van de Weerdhof
Number of
meetings held
during tenure
during the year
Number of
meetings
attended
4
4
4
4
4
4
Membership
The Nomination Committee comprises Non-Executive Directors and is
chaired by David Hearn. There were no changes to the Committee’s
membership during the year. Other Directors and management are
invited to attend meetings as appropriate.
Key objectives
To ensure the Board and Executive Team comprise individuals with
the appropriate skills, knowledge, experience and diversity, and to
ensure that the Board is effective in discharging its responsibilities.
Responsibilities
The Board has approved terms of reference for the Nomination
Committee which are available on the Governance pages of the
Group’s website, www.safestore.com, within ‘Governance
Documents’. These provide the framework for the Committee’s work
in the year and can be summarised as:
• assessing the composition of the Board and making
recommendations on appointments to the Board and
senior executive succession planning; and
• overseeing the performance evaluation of the Board,
its Committees and individual Directors.
How the Committee operates
The Nomination Committee met as necessary and each meeting had
full attendance.
Activities of the Committee during the year
Appointment of a new Non-Executive Director
During the year the Committee reviewed the Board’s size, skill set
and diversity and agreed to undertake a search for a new additional
Non-Executive Director.
Following a tender process the Committee engaged Teneo to conduct
and advise on the executive search for a new Non-Executive Director.
Teneo has signed up to the voluntary code of conduct on gender
diversity and best practice, and is accredited under the enhanced
code of conduct for executive search firms, which specifically
acknowledges those firms with a strong track record in and promotion
of gender diversity in FTSE 350 companies. Teneo has no other
connection with the Group or any of the Company’s Directors.
The Nomination Committee prepared a job specification and agreed
a candidate profile for Teneo to undertake an executive search. A diverse
range of candidates with a breadth of experience were considered.
An extensive search of the market was conducted to develop a
longlist of 13 candidates. The Nomination Committee reviewed the
longlist of potential candidates from which a shortlist of six candidates
was drawn up for further review and discussion by the Committee.
The Committee reviewed the respective skills and experience of the
shortlisted candidates and their fit with the Board’s candidate profile.
The members of the Committee unanimously recommended Avis
Darzins to the Board and the Board approved Avis’ appointment as a
Non-Executive Director and a member of the Audit and Remuneration
Committees with effect from 1 September 2023.
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Nomination Committee report continued
Activities of the Committee during the year continued
Appointment of new Non-Executive Director continued
A significant amount of the Committee’s time in 2023 was spent on Board composition; other activities of the Nomination Committee included:
Responsibilities
Activities
Board and Committee
composition
• Assessed the diversity, skill set and composition of the existing Board and its Committees.
• Oversaw the process for appointing an additional Non-Executive Director.
Succession planning
• Discussed succession planning in respect of both Board members and senior management within the Group.
Board development
• Reviewed the programme for Non-Executive Director development.
Governance
• Reviewed the Group’s culture, values and behaviours.
• Discussed the remit and role of the Committee and reviewed its terms of reference.
Succession planning
It is a key responsibility of the Committee to advise the Board on succession planning. The Committee ensures that future changes in the
Board’s membership are anticipated and properly managed and that, in the event of unforeseen changes, management and oversight of the
Group’s business and long term strategy will not be disrupted. The Committee also addresses continuity in, and development of, the Executive
Committee below Board level.
Board and Committee performance evaluation
The Committee’s performance was reviewed as part of the 2023 internal Board and Committee evaluation process, which is explained
on pages 83 and 84. The review found that the Committee functions effectively and should continue to develop succession plans at Board
and executive level with due regard for the benefits of diversity.
Directors standing for election and re-election
In accordance with the Company’s Articles of Association and the provisions of the Code, Avis will be subject to election and the remaining
Directors will stand for re-election, at the Company’s 2024 AGM. Following the annual Board performance review and the outcome of
performance reviews of individual Directors, I can confirm that each Director subject to either election or re-election:
• continues to operate as an effective member of the Board;
• remains committed to their roles and has sufficient time available to perform their duties; and
• has the skills, knowledge and experience that enable them to discharge their duties properly and contribute to the effective operation
of the Board.
The Board, on the advice of the Committee, recommends the election or the re-election of each Director. Further information on the Directors,
including their skills and experience, can be found in the Directors’ biographies on pages 80 and 81.
I will be available at the Annual General Meeting to answer any questions on the work of the Nomination Committee.
David Hearn
Chair of the Nomination Committee
16 January 2024
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Audit Committee report
“The Company’s control environment
remains robust.”
Ian Krieger
Chair of the Audit Committee
Meetings held in 2022/23
Members of the Committee during the year
ended 31 October 2023
Number of
meetings held
during tenure
during the year
Number of
meetings
attended
Ian Krieger (Chair)
Gert van de Weerdhof
Jane Bentall*
Avis Darzins
4
4
4
1
4
4
3
1
Responsibilities
The Board has approved terms of reference for the Audit Committee,
which are available on the Governance pages of the Group’s website,
www.safestore.com, within ‘Governance Documents’. These provide
the framework for the Committee’s work in the year and can be
summarised as providing oversight of the:
• appropriateness of the Company’s external financial reporting;
• relationship with, and performance of, the external auditor;
• Group’s internal audit arrangements and the risk management
Note:
*
Jane Bentall was unable to attend an Audit Committee meeting due to a family
medical emergency.
framework; and
• Group’s internal control framework.
Membership
The Audit Committee comprises solely independent Non-Executive
Directors. Avis Darzins was appointed as a member of the Committee
on 1 September 2023. The members of the Committee have been
selected to provide a wide range of financial and commercial expertise
necessary to fulfil the Committee’s duties and responsibilities and I am
the Committee’s designated financial expert for the purposes of
the Code.
In order to ensure that the Committee continues to have experience
and knowledge relevant to the sector in which the Company operates,
all of the Non-Executive Directors receive regular updates on
business, regulatory, financial reporting and accounting matters.
The Committee’s performance was reviewed as part of the 2023
Board evaluation, which is explained on pages 83 and 84. The review
found that the Committee functions effectively and that issues are
dealt with in a thoughtful, clear and rigorous manner.
After nine years as Chair of the Audit Committee, I will be standing
down from this role at the Company’s 2024 Annual General Meeting
and will be replaced by Jane Bentall.
Key objectives
The provision of effective governance over the appropriateness of the
Company’s financial reporting, the performance of both internal audit
arrangements and the external auditor and oversight over the
Company’s system of internal control.
How the Committee operates
The Audit Committee met four times during the year, and has
an agenda linked to the events in the Group’s financial calendar.
In addition to the Committee members, the following individuals
attend by invitation:
• the Chief Financial Officer and the Group Financial Controller;
• the Chairman and the Chief Executive Officer;
• the Head of Internal Audit;
• other senior managers, as appropriate, including those responsible
for IT security and risk management;
• the audit partner, directors and senior managers from Deloitte; and
• the valuation team from the Company’s property valuers, Cushman
& Wakefield.
This year, during two Audit Committee meetings, the Committee met
separately with Deloitte without any other member of management
being present.
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Audit Committee report continued
Main activities of the Committee during the year
A summary of the Audit Committee’s main activities during the year included the following items:
Responsibilities
The Audit Committee has:
Financial reporting
• reviewed the Annual Report and Financial Statements and that, taken as a whole, it is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company’s
performance, business model and strategy;
• assessed and concluded on the Group’s viability statement and the appropriateness of adopting the going
concern basis of accounting for the full and half year financial results;
• reviewed the significant issues and material judgements which were made in preparing the 2023 half year
results and the Annual Report and Financial Statements;
• considered and agreed the approach for performing the valuations of investment properties for the Annual
Report and Financial Statements and interim results;
• challenged the valuers findings and judgements in relation to the property valuation;
• reviewed the integrity of the financial statements and announcements relating to the financial performance and
governance of the Group at year end and half year;
• reviewed the principal judgemental accounting matters affecting the Group based on reports from both the
Group’s management and the external auditor;
• considered alternative performance measures, not defined under IFRS or ‘non-GAAP’ measures, ensuring
consistency with how management measures and judges the Group’s financial performance; and
• reviewed and agreed the Company’s response to the FRC’s request for information in relation to the Company’s
Annual Report and Financial Statements for the year ended 31 October 2022.
External auditor
• reviewed and approved the audit plan with the external auditor, and that it was appropriate for the Group,
including in respect of scope and materiality and aligned to the key risks of the business;
• considered external audit effectiveness and independence;
• challenged the auditor’s findings and judgements in relation to the property valuation;
• approved auditor remuneration; and
• considered the requirement to tender for audit services, in line with the Statutory Services for Large Companies
Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Responsibilities) Order 2014.
• reviewed the effectiveness of the Group’s internal controls and disclosures made in the Annual Report and
Financial Statements;
• approved the internal audit plan for 2023 and 2024; and
• assessed the effectiveness and independence of the internal audit team.
Internal audit
arrangements
Governance and risk
• monitored the adequacy and the effectiveness of the Group’s ongoing risk management systems and
processes, through risk and assurance plans and reports, including:
• store assurance audit reports;
• internal financial control assessments;
• fraud and loss prevention reports; and
• operational risk updates, including IT security, health and safety and climate change risk;
• reviewed the Company’s anti-corruption and bribery statement and policy, and whistleblowing (“Speak Out”)
policy and procedures;
• monitored the effectiveness of the Company’s information security and business continuity arrangements; and
• reviewed the Company’s REIT compliance and tax strategy.
Appropriateness of the Company’s external
financial reporting
Financial reporting and significant financial judgements
The Committee assessed whether suitable accounting policies
had been adopted and whether management had made appropriate
estimates and judgements. The Committee reviewed accounting
papers prepared by management which provided details on the
main financial reporting judgements. The Committee paid particular
attention to the investment in the German associate with Carlyle
ensuring that the correct accounting treatment had been applied
and the investment in associate had been correctly recorded using
the equity method of accounting.
The Audit Committee reviewed the assumptions associated with
the accounting for share-based payments to ensure that they were
accurately measured and disclosed appropriately in the Annual Report
and Financial Statements in accordance with IFRS 2 “Share-based
Payments”, with particular focus on the assessment of the
performance conditions under which the share-based payments vest.
The Committee also reviewed reports by the external auditor on the
full year and half year results which highlighted any issues with respect
to the work undertaken on the year-end audit and half year review.
The Committee paid particular attention to matters it considered
important by virtue of their impact on the Group’s results and
remuneration, and particularly those which involved a high level
of complexity, judgement or estimation by management.
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Safestore Holdings plc | Annual report and financial statements 2023
The Committee has concluded that there were not significant levels
of judgements included in the financial statements, other than for the
property valuation as described below.
Property valuations
The key area of judgement that the Committee considered in reviewing
the financial statements was the valuation of the investment property
portfolio. Whilst this is conducted by independent external valuers, it
is one of the key components of the financial results and is inherently
complex and subject to a high degree of judgement and estimation.
As well as detailed management procedures and reviews of the process,
the Committee met the Group’s valuers to discuss the valuations, review
the key judgements and discuss whether there were any significant
disagreements with management. This year the Committee reviewed
and challenged the valuers on the cap rates, rental growth assumptions
and stabilised occupancy levels, and also the considerations made
around the macro-economic and inflationary environment, in order to
agree the appropriateness of the assumptions adopted. The Committee
also challenged the valuers and satisfied itself on their independence,
their quality control processes (including peer partner review) and
qualifications to carry out the valuations. Management also has
processes in place to review the external valuations. In addition, the
external auditor uses valuation experts to conduct a detailed review of
the key assumptions that underpin the investment property valuations
and reports their findings to the Committee.
A more detailed explanation of the background, methodology and
judgements that are adopted in the valuation of the investment
properties is set out in note 13 to the financial statements.
Financial statements
The Committee considered and was satisfied with management’s
presentation of the financial statements.
Management confirmed to the Committee that it was not aware of
any material misstatements and the auditor confirmed that it had
found no material misstatements during the course of its work.
The Committee is satisfied that the judgements and estimates made
by management are reasonable and that appropriate disclosures have
been included in the financial results. After reviewing the reports from
management and following its discussions with the valuers and auditor,
the Committee is satisfied that the financial statements appropriately
address the critical judgements and key estimates, both in respect
of the amounts reported and the disclosures. The Committee is also
satisfied that the processes used for determining the value of the
assets and liabilities have been appropriately reviewed and challenged
and are sufficiently robust.
Fair, balanced and understandable assessment
At the request of the Board, the Committee also considered whether
the Annual Report and Financial Statements was fair, balanced and
understandable and whether it provided the necessary information for
shareholders to assess the Company’s performance, business model
and strategy.
The Committee has advised the Board that in its view, taken as a
whole, the Annual Report and Financial Statements is fair, balanced
and understandable. In reaching this conclusion, the Committee
considered the overall review and confirmation process around the
Annual Report and Financial Statements, going concern and viability.
The Committee was provided with, and commented on, a draft copy
of the Annual Report and Financial Statements. In carrying out the
above processes, key considerations included ensuring that there was
consistency between the financial results and the narrative provided in
the front half of the Annual Report. The Committee is satisfied that
alternative performance measures, not defined under IFRS or
‘non-GAAP’ measures, are consistent with how management
measures and judges the Group’s financial performance.
Going concern and viability statement
The Committee has reviewed the Group’s assessment of viability over
a period of three years. The Committee’s approach in assessing going
concern and the viability statement is set out on page 42.
Financial Reporting Council’s (“FRC”) review
of the Company’s Annual Report and Financial
Statements for the year ended 31 October 2022
The Company received a request for further information from the FRC
in relation to its Annual Report and Financial Statements for the year
ended 31 October 2022. The Audit Committee reviewed and agreed
its response to the FRC. Accordingly, the Company provided further
information to the FRC concerning the payment of the 2022 interim
dividend and satisfactorily explained the Company’s accounting
treatment for the settlement of debt following the Group’s acquisition
of Carlyle’s 80% share of the Benelux Joint Venture. Whilst the
Company had adequate distributable reserves to cover the 2022
interim dividend, paid on 11 August 2022, the Company agreed
to file Company accounts for the half year ended 30 April 2022 at
Companies House and to propose resolutions at its 2024 AGM to
approve deeds of release between the Company and each of its
shareholders and Directors.
The FRC’s review provides no assurance that our Annual Report and
Financial Statements for the year ended 31 October 2022 are correct
in all material respects; the FRC’s role is not to verify the information
provided but to consider compliance with reporting requirements.
Relationship with, and performance of,
the external auditor
Annual auditor assessment
During the year, the Committee conducted a review of the
effectiveness of the external audit process and the audit quality.
In considering the effectiveness of the external audit, the Committee
requested reports from the external auditor and management on the
audit process, quality procedures and the handling of key judgements.
In addition the Committee assessed:
• the arrangements for ensuring the external auditor’s independence
and objectivity;
• the quality of the audit team and their expertise;
• the quality and scope of the audit plan and reporting;
• the quality of the formal audit report to shareholders;
• the robustness and perceptiveness of the auditor in its handling
of the key accounting and audit judgements; and
• the content of the external auditor’s comments on control
improvement recommendations.
The Committee also sought the views of key members of the finance
team, senior management and Directors on the audit process and
the quality and experience of the audit partner engaged in the audit.
Their feedback confirmed that the auditor had shown the requisite
commitment in providing its services and has demonstrated depth
of knowledge of the Company and the industry, with the necessary
robustness, independence and objectivity. The Auditor continues
to perform well and provides an appropriate level of challenge
to management.
It is standard practice for the external auditor to meet privately with
the Audit Committee, without any member of management or the
Executive Directors being present, at least once a year.
Safestore Holdings plc | Annual report and financial statements 2023
91
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Audit Committee report continued
Relationship with, and performance of,
the external auditor continued
External auditor objectivity, independence and non-audit work
The Audit Committee’s terms of reference set out that it is responsible
for the formal policy on the award of non-audit work to the auditor.
The Committee has formalised procedures for the approval of non-audit
services which stipulate the services for which the auditor will not be
used. The policy also stipulates projects where the auditor may be
used, subject to certain conditions and pre-approval requirements.
In order to preserve auditor objectivity and independence, the external
auditor is not asked to carry out non-audit work. A report of all audit
and non-audit fees payable to the external auditor is provided to the
Committee at each meeting, including both actual fees for the year to
date and a forecast for the full year, analysed by project and into
pre-defined categories. In the current financial year, Deloitte LLP
provided non-audit services, amounting to £50,000 covering first year
engagement of ESG covenant compliance work, for the Company’s
lenders. It was determined that the nature of the work would not
impact auditor objectivity and independence given the safeguards
in place.
It is the Committee’s policy to ensure that there is audit partner
rotation every five years to safeguard the external auditor’s
independence and objectivity. Deloitte was appointed as external
auditor to conduct the audit for the 2014 financial year. The first lead
audit partner retired following the 2017 audit and his successor retired
following the 2022 audit. Stephen Craig was appointed as the new
lead audit partner for the 2023 audit.
The auditor is asked on an annual basis to articulate the steps that it
has taken to ensure objectivity and independence, including where
the auditor provides non-audit services. As part of the 2023 audit,
Deloitte confirmed that it was independent within the meaning of
applicable regulatory and professional requirements. Taking this into
account and having considered the steps taken by Deloitte to
preserve its independence, the Committee concluded that Deloitte’s
independence had not been compromised, notwithstanding the level
of non-audit fees incurred during the year.
Audit tender
Deloitte was appointed by the Company’s shareholders as the
Group’s statutory auditor in 2014 following a formal tender process.
The lead partner for Deloitte was rotated in 2023. As required by the
Statutory Auditors and Third Country Auditors Regulations 2016
(“SATCAR”), the Company was required to undertake a formal tender
for audit services for its financial year ending 31 October 2024.
At the end of 2023, the Board invited a number of audit firms to
participate in a formal tender for the audit and related services of the
Group, commencing with the audit for the year ending 31 October
2024. Confirmation of intent to participate was received from KPMG
and Deloitte, with other firms declining to participate due to independence
and capacity challenges. The Company undertook an RFP to assist
the Audit Committee in making its recommendation to the Board. The
tender process was led by the Audit Committee with assistance from
management. Key personnel were invited to have a series of
management meetings with the RFP participants.
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Auditors were invited to submit a final proposal and make a
presentation to the Audit Committee. The proposals were required
to cover the following:
• understanding of the business and industry;
• approach to servicing other geographies;
• understanding of the Company’s overseas geographies,
and their audit approach;
• strength and experience of their team;
• audit approach;
• quality assurance;
• communication and reporting;
• independence;
• implementation; and
• fees.
The Audit Committee evaluated the proposals carefully against set
criteria and received feedback from management meetings.
Appointment or Re-appointment of auditor
At the time of signing of this report, the outcome of the Audit Tender
had not been determined. The Audit Committee will make a
recommendation to the Board on the outcome of the Tender before
the publication of the Notice of Meeting for the Company’s Annual
General Meeting on Wednesday, 13 March 2024 and the appointment
or re-appointment of the Company’s Auditor will be put to shareholder
vote at the Annual General Meeting.
Group’s risk management and internal
control framework
The Board, as a whole, including the Audit Committee members,
considered whether the nature and extent of Safestore’s risk
management framework and risk profile were acceptable in order to
achieve the Company’s strategic objectives. The Board and Committee
were satisfied with the actions being taken by management to remedy
and concerns raised by our internal audit function. As a result, the
Committee considered that the Board has fulfilled its obligations under
the Code. For more information on risk mitigation activities, see the
Principal Risks section of the Strategic Report.
Safestore’s internal controls, along with its design and operating
effectiveness, remain a key priority for the Group and are subject to
ongoing monitoring by the Audit Committee through reports received
from management, along with those from the external auditor. The
Committee, together with management, has continued to maintain
its comprehensive review of the controls across the business. The
Committee is satisfied that the Company’s control environment
remains robust. The risks and uncertainties facing the Group, and its
internal control processes, are considered in the strategic report on
pages 35 to 40 and on pages 85 and 86.
Internal audit
The Audit Committee has oversight responsibilities for the new internal
audit team, established during the 2023 financial year, which is
responsible for reviewing operational and financial controls at head
office and store level. The Committee has also reviewed the Group’s
risk management framework and its linkage to the inaugural internal
audit plan.
I will be available at the Annual General Meeting to answer any
questions on the work of the Audit Committee.
Ian Krieger
Chair of the Audit Committee
16 January 2024
Directors’ remuneration report
for the year ended 31 October 2023
“The Company has delivered a year
of significant strategic progress
during 2022/23.”
Laure Duhot
Chair of the Remuneration Committee
Part A: Annual statement
Dear shareholder
On behalf of the Remuneration Committee (the “Committee”), I am
pleased to provide an overview of our work in relation to both Director
and wider workforce remuneration for the year ended 31 October 2023.
FY2023 has proved to be an extremely busy year for the Committee
with a significant majority of our time spent developing our new 2023
Directors’ Remuneration Policy (the “Policy”). I was delighted to see
that it was positively received by our shareholders, with 97.4% of the
votes in favour and would like to thank all our shareholders and the
investor bodies for their constructive feedback provided through an
extensive engagement process conducted over the year, and for
showing their overwhelming support at our General Meeting (“GM”)
held on 12 July 2023. We will continue to consult with shareholders as
we normalise our Remuneration Policy over the medium term while
ensuring that pay outcomes are closely aligned with corporate
performance and the shareholder experience.
The other key activities undertaken by the Committee during the year
were as follows:
• proactively responded to the 74.7% votes in favour of the 2022
remuneration report during the consultation noted above, as set out
in the Board’s Public Statement dated 29 August 2023;
• considered wider workforce pay policies and practices and
feedback from the workforce panel;
• approved the 2023 salary increase for Executive Directors and
senior managers alongside the wider workforce salary budget;
• agreed annual bonus targets for 2023 and reviewed and approved
the 2023 LTIP grant and the associated performance conditions;
• discussed and approved Executive Director and senior manager
remuneration outcomes for 2023 including measuring the
performance outcomes of the relative TSR element of the 2020 LTIP
award and the EPS element of the 2021 LTIP award;
• reviewed the gender and ethnicity pay gap analysis results and
signed off corresponding actions;
• reviewed and approved the Directors’ remuneration report for 2022/23;
• reviewed and approved the retirement package for the CFO
following the notification to the Board of Andy Jones’ intention to
retire; and
• reviewed the Committee’s terms of reference.
2023 Remuneration Policy
The 2023 Directors’ Remuneration Policy was put to a binding
shareholder vote on 12 July 2023 and took effect immediately upon
conclusion of the GM. It is intended that the new Directors’ Remuneration
Policy will remain in force until the 2026 AGM such that the Remuneration
Policy approval reverts to a normal three-year timeline. There are no
planned changes to the Policy over the period to which it applies.
The Committee determined that it would be appropriate to reposition
the Executive Directors’ total remuneration opportunity, at grant,
available for exceptional performance to the upper quartile of FTSE
250 companies on the basis that:
• the management team is highly regarded by investors;
• the team has had an outstanding track record of performance over
a decade (consistently in excess of the FTSE 250 upper quartile TSR);
• the achievement of significant expansion resulted in increased
complexity with the business now operating across multiple
European countries; and
• Safestore has moved into the upper quartile of companies in the
FTSE 250 by market capitalisation.
As part of the process undertaken by the Committee when designing
the Policy, it carried out an extensive consultation seeking to engage
with around 50 of our largest shareholders as well as investor bodies.
The Committee collated the feedback received and understood that
some areas of the proposals required further consideration to ensure
significant levels of shareholder support. In particular, there was a
desire across our shareholder base for the Company to move to a
more conventional remuneration structure over the medium term,
particularly with regard to the split between base salary and LTIP to
deliver upper quartile total remuneration for exceptional performance.
Therefore, the Committee pledged to move to a conventional
remuneration package over time consisting of a competitive salary,
pension contribution rates in line with the wider workforce, and
incentives award levels (annual bonus and LTIP), each at levels within
the market range for the respective role. The Committee determined
that a phased approach in which salary increases are applied, which
for the avoidance of doubt may be higher than the average workforce
rate, together with reductions in the LTIP opportunity would be the
most appropriate way to achieve the desired structure and ensures
alignment with shareholder expectations, although it did not entirely
rule out a one-off adjustment if the opportunity could arise.
For FY2023, to take into consideration the feedback from many
shareholders regarding the particularly difficult economic environment
and cost of living crisis, the base salary increase for the Executive
Directors was 6%, below the average UK workforce increase of 8.5%.
The maximum LTIP opportunity for the CEO and CFO was 480% and
344% of salary respectively, which included a maximum multiplier of
1.6x, and requires upper decile TSR performance in order to vest in
full. It is the Committee’s intention that the maximum multiplier will
remain at 1.6x for upper decile relative TSR performance, ensuring
that the Committee’s guiding principle of upper quartile total
remuneration for exceptional performance is maintained throughout
the life of the Policy.
Safestore Holdings plc | Annual report and financial statements 2023
93
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
The Company continues to increase base salaries for all colleagues
and Board Directors. I am pleased to report that an average UK
workforce increase of 8.5% was provided to colleagues during 2023,
above the level of increase applied to the Executive and Non-Executive
Directors’ salaries and fees.
2023 performance metrics
The highlights set out above have translated into a solid year for
Safestore. Our 2023 performance can be summarised as follows:
• Group revenue up 5.5% to £224.2 million;
• Underlying EBITDA up 5.3% to £142.2 million;
• Adjusted Diluted EPRA Earnings per Share up 0.8% to 47.9 pence
resulting in 16.6% p.a. growth over the three years to 31 October 2023;
• proposed total dividend in respect of the year to 31 October 2023
up 1% to 30.1 pence per share;
• property pipeline at 31 October 2023 of 1.5 million sq ft of MLA;
• Group occupancy at 31 October 2023 stood at 77%, down 5.1ppts
on 2022, and total occupancy was 6.231 million sq ft, down 1.4%
on 2022;
• continued progress made in relation to sustainability including
further reductions in our emissions and exceeding our target whereby
100% of construction waste is diverted away from landfill; and
• maintained EPRA Silver award status.
Despite our share price having fallen somewhat recently, £100 invested
in Safestore in September 2013, when the current management team
took over the business, would be worth £673 as at 31 October 2023,
taking account of share price growth and reinvested dividends.
This represents outperformance against key competitors and
industry benchmarks.
Remuneration outcomes for 2023
Base salary increases
The Committee determined, as part of the implementation of the 2023
Policy, to increase the Executive Directors’ salaries by 6% effective
from 1 May 2023 (which was below the UK average workforce
increase rate of 8.5%) resulting in salaries of £481,853 for the CEO
and £343,320 for the CFO.
Pension
Executive Directors’ pension contribution rates continue to be aligned
with the average workforce rate of 4.1% of salary.
Annual bonus outcome
Targets for the 2023 annual bonus set by the Committee were based
two-thirds on adjusted EBITDA (excluding all leasehold rent charges
and adjusted for budgeted exchange rates) and one-third on strategic/
operational measures with a maximum opportunity of 150% of salary.
The Committee confirms that no performance target has been
adjusted in the year for any reason.
Part A: Annual statement continued
2023 Remuneration Policy continued
Our commitment to achieving the goal of a conventional remuneration
structure over time is absolute, although it must be recognised that we
cannot anticipate the remuneration environment accurately and it may
be that our objective is not fully met within this timeframe. It is our
intention, however, that sufficient progress has been made such that,
in principle, a new Policy put to shareholders in 2026 would reflect a
“normalised structure”. If circumstances permit, the Committee may
also seek to accelerate this process over a shorter time frame as
noted above.
On behalf of the Committee, I would like to thank our major
shareholders again for both engaging with our remuneration
challenges and inputting into the remuneration proposals. We were
pleased that a significant majority of our shareholders have shown
their support at the 2023 GM. The Committee remains committed to
ongoing dialogue with the Company’s shareholder base to ensure the
views of all stakeholders are considered and that the correct decisions
are made for the Company. Full details of the 2023 Remuneration
Policy can be found in the Notice of Meeting for the 12 July 2023 GM
which is available on the Company’s website.
Overview of business performance
As set out in this Annual Report, the Board is pleased with Safestore’s
solid financial performance. After two years of outperformance in
which the Group delivered total like-for-like revenue growth as well as
what we believe to be industry leading REVPAF in our key markets,
2023 has been a year of consolidation and strategic progress. Whilst
we have seen some softness in the UK’s business customer segment,
reflective of a weaker macro-economic environment, trading with our
domestic customers and the remainder of business customers has
been resilient.
During the year our strategic progress has been significant. The Group
has opened, acquired, or extended 13 stores (five in the UK, six
in Spain and two in the Netherlands) adding over 500,000 sq ft of
Maximum Lettable Area (“MLA”) to the portfolio. In addition, a pipeline
of a further 1.5 million sq ft across 30 projects has been established
which represents 18% of the existing MLA of the business. A Joint
Venture with Carlyle was established earlier in the year and has
facilitated the Group’s entry into the under-penetrated German market
and the integration of our Benelux business, acquired in 2022, is
now complete.
Looking beyond any short term volatility, there remains a significant
undersupply of quality self-storage capacity across the UK and
Europe. New locations feed awareness which subsequently drives
demand. Safestore’s industry leading business model remains
unchanged and we have significant growth to deliver both from filling
the 1.8m sq ft of fully invested, currently unlet space, and from the
new sites in our pipeline, across major cities in the UK and continental
Europe. Safestore has a proven track record, and the returns we
deliver are significantly ahead of our cost of debt, so we look forward
to the future with confidence.
This continued performance could not have been possible without our
people, whom we pro-actively continue to engage with and develop.
This includes significant training, supporting and incentivising all
colleagues to perform to the best of their ability. We recognise that it is
also critical for our colleagues to feel valued as well as to be paid fairly.
We are exceptionally proud that our commitment to colleagues was
recognised externally in 2021 by the award of the prestigious Investors
in People (“IIP”) Platinum accreditation.
94
Safestore Holdings plc | Annual report and financial statements 2023
Given the tough operating environment and the challenging targets set
by the Committee, the Company narrowly failed to meet the adjusted
EBITDA (adjusted for budgeted exchange rates) threshold level of
performance (£142.1 million versus threshold of £144.8 million). On the
basis that the threshold performance level under the EBITDA measure
was not achieved, under the Policy, no payout can be made under the
strategic/operational measures, such that the Remuneration
Committee was not formally required to test achievement under this
element for 2023. However, in line with our commitment to provide
transparency in relation to the strategic/operational bonus element, we
have set out a summary of these measures and their achievement for
2023 in the annual report on remuneration.
On this basis, the formulaic outcome for the 2023 Executive Director
bonus is nil. Despite there being nil annual bonus for the year, the
Committee acknowledged the management team’s excellent
performance, particularly in relation to the strategic progress made
during the year which will create long-term value for our shareholders.
However, the Committee determined that it should not exercise its
discretion to adjust the formulaic bonus outturn as it was aligned with
the shareholder experience over 2023.
Long Term Incentive Plans
2021 LTIP – EPS and Relative TSR element performance
measurement
The performance period of the EPS element of the 2021 LTIP ended
on 31 October 2023; EPS performance accounts for two-thirds of the
award. On that basis, the Committee measured the Company’s EPS
growth and Cash on Cash Return in relation to the underpin over the
three-year performance period. Adjusted Diluted EPRA EPS increased
by 16.6% p.a., significantly ahead of the 8% p.a. growth required for
maximum vesting. The average Cash on Cash Return over the same
period was 11.9% which also exceeded the 8% underpin target
resulting in 100% of the awards being earned under the EPS element
of the 2021 LTIP.
The final vesting level for the 2021 LTIP will not be determined by the
Committee until the vesting date of 28 January 2024, with the balance
of awards subject to the Company’s relative TSR performance
measured over the three-year period ending on 27 January 2024. As
at 31 October 2023, Safestore’s TSR growth is between the median
and upper quartile of the FTSE 250 excluding the Investment Trusts
Index and above the upper quartile of the FTSE 350 Supersector Real
Estate Index, which would equate to around 85% vesting under the
relative TSR measure.
Therefore, the Committee confirms that based on performance to
date, the total 2021 LTIP awards are expected to vest at around
95% of maximum and will consider whether the formulaic outcome
is in line with underlying Company performance at the vesting date.
The Committee will also review the outcome at the vesting date in
the context of the share price at grant to ensure no windfall gains
have occurred.
The value of the 2021 LTIP awards expected to vest in January 2024,
plus an estimate of the value of dividend equivalents accrued to 31
October 2023, has been included in the single figure of remuneration
table for 2023 on the basis that the relative TSR performance period
has been substantially completed.
2020 LTIP – Vesting Outcome
As reported in the 2022 remuneration report, the EPS element of the
2020 LTIP representing two-thirds of the awards was earned in full as
at 31 October 2022. The balance of the awards was subject to a
relative TSR measure with a three-year performance period ending on
17 March 2023. On the basis that Safestore’s TSR was significantly in
excess of the upper quartile of both the FTSE 250 excluding Investment
Trusts Index and FTSE 350 Supersector Real Estate Index peer
groups, the formulaic vesting outcome for this element was 100%.
The Committee determined that the formulaic vesting outcome was
aligned with the Company’s underlying performance on the basis that:
• the Group’s profits, as measured by EPS, and its share price had
increased to a similar extent over the performance period; and
• the Group’s financial success had been achieved in parallel with
it receiving several accolades in relation to its colleague initiatives,
ESG performance, and consistently outstanding customer
feedback scores.
In line with best practice, the Committee also debated whether any
windfall gains had been received as a result of the 2020 LTIP vesting
and noted that:
• grant price of the award (£6.74) was 54% higher than the grant price
of the previous LTIP award (i.e., the 2017 award) and was only 3%
below the average share price over the twelve months prior to the
grant date;
• had an LTIP grant been awarded in mid-March 2019, the share
price at grant would have been around £6. This would mean that
the grant price of the 2020 LTIP would have been 13% higher; and
• Safestore significantly outperformed peers in terms of TSR over the
performance period.
Taking these factors into consideration, the Committee determined
that participants had not benefited from a windfall gain and therefore,
in line with formulaic outcome, 100% of the 2020 LTIP awards vested
on 18 March 2023. The Executive Directors’ awards are also subject
to a 2 year post-vesting holding period.
Deferred annual bonus
Restricted shares granted in respect of the annual bonus earned
in the year to 31 October 2020 were subject to a holding period of
2 years which ended on 1 November 2022. The number of restricted
shares granted to the CEO and CFO was 13,681 and 9,748 respectively.
2023 LTIP grant
In line with the new Policy set out above, the Committee made a grant
of LTIP awards to the Executive Directors on 12 July 2023. The Base
awards had a face value of 300% and 215% of base salary with a
maximum multiplier of 1.6x such that the overall maximum award
was 480% and 344% of salary for the CEO and CFO respectively.
The awards will vest after three years subject to the achievement of
financial and non-financial performance measures: Adjusted Diluted
EPRA EPS growth (65% weighting), aggregate net increase in “MLA”
(25% weighting), and ESG targets (EPC ratings of developments and
refurbishments at A or B and reduction in greenhouse gas emission
intensity with a total of 10% weighting split equally between the 2
measures). The Base awards are combined with a relative TSR multiplier,
and an absolute and relative TSR performance modifier. The awards
will also be subject to a two-year post-vesting holding period.
The Committee will have overriding discretion to change the formulaic
outcome (both downwards and upwards) if it is out of line with the
underlying performance of the Company. This will include an
assessment at vest as to whether any windfall gains have occurred.
Full details of the performance conditions attached to the awards can
be found in the annual report on remuneration on pages 116 and 117.
Safestore Holdings plc | Annual report and financial statements 2023
95
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
2022 Remuneration report voting outcome
The Committee noted the significant vote against the 2022 annual
report on remuneration, with 74.66% of the votes in favour of the
report. As set out in last year’s Directors’ Remuneration Report, the
Board expected this outcome given previous shareholder engagement
which indicated that some investors who voted against the 2017
Remuneration Policy at its inception had a policy to vote against all
future remuneration reports that disclosed the vesting value of the
2017 LTIP awards. In addition, a number of these shareholders noted
that their vote against the remuneration report did not reflect a vote
against either the management or the Board and that they accept fully
that the payouts reflect the outstanding value creation for all
shareholders over the five-year period from 2017 to 2022.
As set out above, the 2023 Remuneration Policy has received
overwhelming levels of support so the Committee is hopeful that its
execution will be viewed favourably over the coming years.
Executive Director change
As announced on 28 September 2023, Andy Jones has notified the
Board of his intention to retire from the role of Chief Financial Officer
and as a Director of the Company. Andy will continue in his role until
the transition to his successor is complete, and the Company has
commenced an external search for his replacement.
For over ten years, Andy has been instrumental in helping deliver
the Company’s strategy, significantly expanding its store portfolio and
entering 4 additional geographies. Given that Andy will continue in his
role until the transition to his successor is complete, the Remuneration
Committee determined that it would be appropriate to grant him a
2024 LTIP award to cover this period. In addition, given that Andy is
retiring, he will be treated as a good leaver in accordance with Policy
and the LTIP rules and, in line with best practice, the Committee
determined that his unvested LTIP awards will be pro-rated for time,
with performance testing and vesting occurring on their normal dates.
Andy will also be eligible for a pro-rated bonus for 2024.
Planned activities for 2024
We set out below the activities which the Committee expects to
undertake next year:
• determine the appropriate recruitment and ongoing remuneration
package for the new CFO when appointed;
• implement the new Policy as part of the Committee’s pledge to
move to a conventional remuneration package over time for both
the new CFO and CEO;
• continue the normal oversight of the annual remuneration cycle
including approving Company-wide salary increases, approving the
annual bonus and LTIP performance measures, weightings and
targets, measuring performance against the bonus targets and
determining the vesting outcomes of the relative TSR element of the
2021 LTIP award and the EPS element of the 2022 LTIP award;
• review of senior manager salaries in the context of Executive
Director salaries; and
• review of wider workforce pay policies and practices and feedback
from the workforce panel.
Part A: Annual statement continued
Remuneration outcomes for 2023 continued
Non-Executive Directors’ fees
The Executive Directors recommended to the Board that Non-Executive
Director and Chairman fees should rise by 6% from 1 May 2023 in line
with the increase applied to the Executive Directors’ salaries, and below
the UK average workforce increase rate of 8.5%. As such, Non-Executive
Director base fees have increased to £61,141, Committee Chair fees
have increased to £11,464, and the Chairman’s fee has increased to
£233,200.
Wider workforce pay
Safestore’s pay principles were reviewed during the year and continue
to set out a framework for making decisions on colleagues’ pay.
Reward packages follow a pay-for-skills model and consist of a
combination of fixed and variable elements, including base pay,
performance related pay, annual bonus, pension and benefits. In the
UK, we also operate an annual all-colleague share plan to foster the
culture of ownership, reflecting our remuneration principles by rewarding
colleagues for the successful execution of strategy over a multi-year
horizon. We are delighted that many UK colleagues are enrolled in our
Sharesave scheme, with 36% participating in our most recent scheme.
Participation in the LTIP has also continued to expand with 73 employees
across four countries being granted awards during the year.
The Committee receives remuneration information from across the
Group regarding annual salary reviews, bonus, gender and ethnicity
pay gaps and CEO pay ratios, together with the principles that are
applied in relation to broader incentive schemes, and how these align
with culture. We recognise that it is critical for our colleagues to feel
valued as well as to be paid fairly.
Our approach to colleague engagement through our formal workforce
advisory panel is now fully embedded. Our 15 People Champions
continue to engage directly with the CEO on a wide range of subjects
including remuneration. In addition, the CEO also ran 2 virtual town
hall sessions where colleagues had the opportunity to raise questions,
discuss business issues and provide feedback. Please see the section
on our communication with colleagues for more information.
I am also exceptionally proud that we hold the prestigious Investors in
People (“IIP”) Platinum accreditation in 2021 and we continue to strive
for excellence in this area.
Our 2022 ethnicity pay gap of 7.7% remains above the latest national
ethnicity pay gap of 2.3%1. This gap tells us that there is still an
under-representation of Black, Asian and ethnic minority colleagues in
higher paid roles. We know that, at our sales colleague level, our mean
ethnicity pay gap is 2.2%. However, many of our colleagues have not
yet shared their ethnicity information, which does limit our ability to
see the wider picture. Encouraging our colleagues to disclose their
ethnicity, and addressing any barriers to them doing so, remains a key
focus for us. Our median gender pay gap of 7.9% is significantly below
the UK average of 14.9%2. We currently have more men than women
in senior leadership positions that attract higher levels of pay; this,
therefore, contributes to our gender pay gap. We can see that women
at Safestore are progressing to more senior levels, as the level of
female representation in our upper pay quartiles is up by 3.4ppts
this year and has slightly reduced in the lower pay quartile.
We have also published our CEO pay ratio for the fifth time in line
with the reporting regulations and the Committee notes that it is
significantly lower than in 2021 and 2022, given the 2017 LTIP awards
have now fully vested.
Notes:
1 Ethnicity pay gaps: 2019, ONS.gov.uk.
2 Gender pay gap in the UK: 2022, ONS.gov.uk.
96
Safestore Holdings plc | Annual report and financial statements 2023
Base salary and LTIP award levels for 2024
At the time of writing, the Committee has not determined 2024 salary
and LTIP Award levels. It is anticipated that 2024 salary, LTIP award
levels and performance targets will be finalised before the publication
of the Notice of Meeting for the 2024 AGM. Therefore, to provide
shareholders with full disclosure of the remuneration decisions which
will be voted upon at the AGM, the Committee will provide details of its
decisions in the notes of the 2024 AGM Notice of Meeting. For future
years, the Committee will revert to the usual approach of disclosing
such details in relation to the implementation of Policy in the
annual report.
Summary
Overall, the Company delivered solid performance during 2022/23
and unfortunately narrowly missed its bonus targets. Although
disappointing, the Committee believes that the 2023 remuneration
outcomes are appropriate and reflective of the shareholder experience.
We will also be asking shareholders to vote in favour of our Directors’
remuneration report at the 2024 AGM; I would welcome any feedback
or comments on this report and look forward to receiving any written
questions ahead of our AGM. You will find details of the conference
facility and how to submit written questions on our website at
www.safestore.co.uk/corporate.
We will continue to engage with shareholders and their representative
bodies on remuneration and other governance matters and thank all
our shareholders for their continued support on remuneration matters.
Finally, I want to recognise that the Company’s performance would not
be possible without the excellence demonstrated by our colleagues.
To all colleagues – thank you for your hard work and commitment to
making Safestore the strong business it remains today.
Approved by the Board on 16 January 2024 and signed on its behalf by:
Laure Duhot
Chair of the Remuneration Committee
16 January 2024
Safestore Holdings plc | Annual report and financial statements 2023
97
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part B: Our remuneration at a glance
Ahead of the annual report on remuneration, we have summarised below the key elements of our current Policy approved at the GM held on
12 July 2023 along with a summary of how we intend to implement the Policy in 2024. The implementation of Policy will be in line with that set
out in the Notice of Meeting from 12 July 2023. We also summarise the key remuneration outcomes for 2023.
Our full Policy can be found on the Safestore website at www.safestore.co.uk.
Summary of our Directors’ Remuneration Policy and planned implementation of Policy for 2024
Element
Key features of Policy approved at 2023 AGM
Implementation for 2024
Executive Directors
Frederic Vecchioli
Andy Jones
Base salary
Reflects an individual’s responsibilities, experience and role.
Base salary of £481,853.
Base salary of £343,320.
Salary increases will normally be applied annually over the life of
the Policy, which for the avoidance of doubt may be higher
than the average workforce rate. This is to rebase fixed pay to
a more market-competitive position allowing a corresponding
reduction in LTIP award levels to achieve a more ‘normalised
remuneration structure’.
(6% increase in May 2023).
(6% increase in May 2023).
The increases were below the average for the UK
workforce (8.5%). Both salaries remain below both the
FTSE 250 and FTSE 350 Supersector Real Estate Index
lower quartiles.
At the time of writing, the Committee has not determined
the level of salary increase to be applied for 2024.
However, to provide shareholders with full disclosure of
the remuneration decisions which will be voted upon at
the AGM, the Committee will set out this information in
the notes of the 2024 AGM Notice of Meeting.
Benefits and
pension
All Executive Directors will receive the average employer
pension contribution rate received by the workforce (currently
4.1% of salary).
Executive Directors will receive a pension contribution/
cash supplement of 4.1% of salary in line with the
average workforce contribution rate.
Market-competitive benefits package provided.
Benefits in line with the Policy.
The Committee would expect to be able to provide other
benefits where appropriate and to adopt benefits such as
relocation expenses, tax equalisation and support in meeting
specific costs incurred by Executive Directors to ensure the
Company and the individuals comply with their obligations in
the reporting of remuneration.
Annual bonus
Maximum award equal to 150% of salary per annum.
Maximum opportunity of 150% of salary.
The annual bonus for 2024 will be based on two-thirds
EBITDA (excludes all leasehold rent charges and
non-recurring items) and one-third strategic/operational
measures. There will be no pay-out under non-financial
measures if threshold performance under the financial
measure is not met.
The Board deems the annual bonus targets to be
commercially sensitive. Full details of the 2024 targets
and their achievement will be disclosed retrospectively in
the 2024 Directors’ Remuneration Report. All other
elements of 2024 annual bonus operation will be in line
with the Policy.
Performance measures are two-thirds financial and one-third
non-financial, with a financial underpin ensuring no payout
for strategic/operational element if financial performance is
below threshold.
Payout for threshold performance is 20% of maximum and for
target performance is 50% of maximum.
Any bonus in excess of 100% of salary will be held in shares
(referred to hereinafter as restricted shares) on a net of tax
basis, via an agreement with the Executive, until the end of the
two-year period following the financial year in which the bonus
is earned.
For bonus paid in cash, malus applies in the year the bonus
is earned and claw-back operates for three years thereafter.
For restricted shares, malus applies until the end of the
two-year period following the financial year in which the bonus
is earned, and claw-back operates for three years thereafter.
Dividends are payable on restricted shares.
The Committee will continue to have overriding discretion to
change formulaic outcomes (both downwards and upwards) if
they are out of line with underlying performance of the
Company. In addition, the Committee has the discretion to
adjust targets or performance measures for any exceptional
events that may occur during the year.
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Safestore Holdings plc | Annual report and financial statements 2023
Element
Key features of Policy approved at 2023 AGM
Implementation for 2024
Frederic Vecchioli
Andy Jones
As set out within the new Policy, the Committee
will determine the appropriate level of LTIP award to
grant to the CEO and CFO for 2024 to move to a more
conventional remuneration structure, taking into account
the salary increase for 2024.
At the time of writing, the Committee has not determined
the salary increase, and therefore the corresponding 2024
LTIP award levels and associated performance targets.
However, to provide shareholders with full disclosure of
the remuneration decisions which will be voted upon at
the AGM, the Committee will set out this information in
the notes of the 2024 AGM Notice of Meeting.
Executive Directors
LTIP
LTIP award of nil-cost options over shares on an annual basis
with a three-year vesting and two-year holding period. Dividend
equivalents will be paid on vested shares.
The maximum annual Base award will be up to 300% of
salary for the CEO and 215% of salary for the CFO/other
Executive Directors.
The performance measures, weightings and targets for the
Base award will be set each year by the Committee based
on a combination of financial and non-financial measures.
Financial measures will not account for less than 65% of the
LTIP opportunity.
The vesting schedule will be such that for the financial
measures, 20% of awards will vest for threshold performance
and 0% of awards will vest for threshold performance for the
non-financial measures.
Vesting of the Base awards can be increased by up to 1.6x
such that the overall maximum award will be up to 480%
and 344% of salary for CEO and CFO/other Executive
Directors respectively.
Total LTIP award levels will be reduced annually during the
Policy period.
Malus applies up to the vesting date and claw-back applies
during the two-year holding period.
The Committee will have overriding discretion to change
formulaic outcomes of the LTIP awards (both downwards and
upwards) if they are out of line with underlying performance of
the Company. In addition, the Committee has the discretion to
adjust targets or performance measures for any exceptional
events that may occur during the year.
Safestore Holdings plc | Annual report and financial statements 2023
99
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part B: Our remuneration at a glance continued
Summary of our Directors’ Remuneration Policy and planned implementation of Policy for 2024 continued
Element
Key features of Policy approved at 2023 AGM
Implementation for 2024
Executive Directors
LTIP continued
Shareholding
guidelines
In-employment guidelines are 600% and 450% of salary for the
CEO and CFO/other Executive Directors respectively.
Post-employment guideline is 350% of salary on cessation for
two years (or their actual shareholding on cessation if lower than
350% of salary). This excludes shares owned pre-18 March
2020 and awards vesting from the 2017 LTIP.
Frederic Vecchioli
Andy Jones
Chair and Non-Executive Directors
Fees
Non-Executive Directors may receive a base fee and
additional fees for chairing a Committee or being the Senior
Independent Director.
The Chairman’s fee: £233,200.
Non-Executive base fee: £61,141.
Committee Chair and SID fee: £11,464.
Non-Executive Director and Chairman fees were
increased by 6% from 1 May 2023 in line with the
increase applied to the Executive Directors’ salaries, and
below the UK average workforce increase rate of 8.5.
Legacy awards
The Company will honour any remuneration related commitments to current and former Executive Directors and Non-Executive Directors
(including the exercise of any discretions available in relation to such commitments) where the terms were agreed and/or commitments made in
accordance with any previous Remuneration Policy of the Company. Such payments or awards will be set out in the Annual Report on
Remuneration in the relevant year. For the avoidance of doubt, it is noted that Executive Directors are eligible to receive payment under any
award made prior to the approval and implementation of the new Remuneration Policy set out in this report.
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Safestore Holdings plc | Annual report and financial statements 2023
Business performance and incentive outcomes in 2023
KPI
Measured in
2023 performance
2023 incentive outcome
Underlying EBITDA in 2023
Annual bonus
5.3% increase to £142.2 million.
Adjusted Diluted EPRA
Earnings per Share growth
over three years to 31 October
2023
TSR growth over three years
to 17 March 2023
2021 LTIP
58.6%, i.e. 16.6% per annum.
2020 LTIP
Safestore = 34.2%.
Upper quartile of:
Optimisation of performance
of existing portfolio
Annual bonus
Strong and flexible
capital structure
Annual bonus
• FTSE 250 Index excluding Investment Trusts = 21.6%; and
• FTSE 350 Supersector Real Estate Index = -7.3%.
As an Investors in People Platinum accredited organisation, our
focus on our colleagues and culture has enabled us to continue
to deliver sustainable business performance.
The time spent on training across the business was over
28,000 hours. Other highlights include:
• Developed a fully online booking and contracting process and
commenced testing and iteration.
• Developed a Construction Analytics function, delivering
improved construction cost control across the Group.
• Developed and integrated multiple technologies to enable
our first fully unmanned stores.
• Expansion of acquisition teams to grow store portfolio.
The Company’s strong capital structure continued to allow it to
take advantage of opportunities across the Group in order to
deliver incremental earnings growth over the longer term.
Highlights included:
• On 11 November 2022, the Group completed the refinancing
of its RCFs which were due to expire in June 2023. The
previous £250 million Sterling and €70 million Euro RCFs
were replaced with a single, unsecured four-year £400 million
multi-currency revolving facility. In addition, a further £100
million uncommitted accordion facility is incorporated in the
facility agreement, which increases funding capacity, allowing
us to continue to consider strategic, value-accretive
investments as and when they arise. The facility is for a
four-year term with two one-year extension options
exercisable after the first and second years of the agreement.
• Group leverage was below the Group’s strategic targeted
level of an LTV ratio of between 30–40% (25.4% for 2023).
Take advantage of selective
portfolio management and
expansion opportunities
Annual bonus
Joint Venture to enter the German market. Started with 7 leasehold
stores but since acquired the freehold of one of the stores and
exchanged contracts on 2 further freehold opportunities.
Acquired new development opportunities in the UK, Spain and
the Netherlands, in addition to opening new stores and
completing store extensions in various locations.
ESG
Annual bonus
Continued external recognition of ESG achievements and
disclosures through the following:
• EPRA Sustainability BPR Silver Award
• GRESB Public Disclosure A
• MSCI ESG ‘AA’
• Support the Goals – 5*
Key:
Threshold or below
Threshold to target
Target to maximum
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part B: Our remuneration at a glance continued
Business performance and incentive outcomes in 2023 continued
This resulted in the following incentive outcomes:
• On the basis that the threshold EBITDA performance level was narrowly missed, there will be no payout under the financial element of the
bonus. In line with the Policy, the payout from the strategic/operational element, is also set to nil as the EBITDA threshold financial gateway has
not been met.
• Although disappointing, the Committee determined that this formulaic outcome was representative of the shareholder experience over the
year and as a result, the 2023 annual bonus payout for the Executive Directors is nil.
• The performance period of the relative TSR element of the 2020 LTIP, which accounts for one-third of the award, ended on 17 March 2023.
Safestore’s performance being in excess of the upper quartile of both peer groups, combined with satisfying the Cash on Cash Return
underpin, resulted in the performance targets under this element being met in full. Therefore, taking account of the EPS element which also
fully vested representing two-thirds of the award, the final vesting level for the 2020 LTIP was determined by the Committee to be 100%.
• The Committee believes that the awards that vested in March 2023 for the Executive Directors and their colleagues are commensurate with
the corporate success that the Company achieved over the three-year performance period (as set out on pages 94 and 95 of the
Remuneration Committee Chair’s annual statement and the annual report on remuneration).
• The performance period of the EPS element of the 2021 LTIP ended on 31 October 2023; EPS performance accounts for two-thirds of the
award. On that basis, the Committee measured the Company’s EPS growth and Cash on Cash Return in relation to the underpin over the
three-year performance period. Adjusted Diluted EPRA EPS increased by 16.6% p.a., significantly ahead of the 8% p.a. growth required for
maximum vesting. The average Cash on Cash Return over the same period was 11.9% which also exceeded the 8% underpin target.
Therefore, the formulaic outcome of this element is that 100% of the awards have been earned.
• The final vesting outcome for the 2021 LTIP will not be determined by the Committee until the vesting date of 28 January 2024, with the
balance of awards earned being subject to the Company’s relative TSR performance measured over the three-year period ending on
27 January 2024. As at 31 October 2023, Safestore’s TSR growth is between the median and upper quartile of the FTSE 250 excluding
Investment Trusts and above the upper quartile of the FTSE 350 Supersector Real Estate Index peer groups, which would equate to 85% of
maximum vesting. Therefore, the Committee confirms that based on current performance and taking account of the EPS element, it expects
the awards to vest at around 95% of maximum and will consider whether the formulaic outcome is in line with underlying Company
performance at the vesting date.
• The Committee is comfortable that the Policy operated as intended and that the overall 2023 remuneration earned by the Executive Directors
was appropriate.
Remuneration in the wider context
Context to our Executive Director remuneration in light of wider workforce considerations:
• The wider workforce predominantly has access to competitive bonus arrangements, can participate in all-colleague share plans and/or
recognition schemes and is eligible to be auto-enrolled into the Safestore Group Personal Pension Plan.
• The wider workforce pay principles have been reviewed, leading to further increases in salaries and benefits, including an average UK
workforce salary increase of 8.5% during the year.
• Continued alignment of Executive Director and general workforce pension contributions.
• Participation in our Sharesave scheme remained well above typical levels at 38%.
• Safestore’s 2022 UK median gender pay gap is 7.9% and 2022 median ethnicity pay gap is 7.7%.
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Safestore Holdings plc | Annual report and financial statements 2023
Part C: Annual report on remuneration
The 2023 annual report on remuneration contains the details of how the Company’s Policy was implemented during the financial year ended
31 October 2023. An advisory resolution to approve this report and the Remuneration Committee Chair’s annual statement will be put to
shareholders at the 2024 AGM.
Pay fairness
To attract and retain the highest calibre individuals, we aspire to become the employer of choice within our sector, maintaining a competitive
reward package that balances fairness to the colleague with the responsible use of shareholders’ funds.
We review our pay principles, which set out a framework for making decisions on colleagues’ pay, annually. The aim is to:
• support the recruitment and retention of high quality colleagues;
• enable us to recognise and reward colleagues appropriately for their contribution;
• help to ensure that decisions on pay are managed in a fair, just and transparent way; and
• create a direct alignment between Company culture and our reward strategy.
As part of our commitment to fairness, we have set out further information about our colleague offering. The various factors which make up our
colleague value proposition are set out below:
Pay and benefits
• We pay all our colleagues above the over-23 National Living Wage
• Under the 2023 LTIP, 73 key colleagues were invited to participate,
rate, regardless of their age. The average annual salary for our store
sales colleagues is £25,445, over £3,771 above the current National
Living Wage for an over-23 year old on a 40-hour contract.
allowing them to share in the success of the Company. The
performance conditions for below Board-level colleagues are the
same as those for the Executive Directors.
• All our sales colleagues are eligible for our performance-based
monthly bonus scheme and can earn up to 50% of their monthly
salary. Our Head Office colleagues are eligible to receive a
discretionary annual bonus, which is calculated against business
targets and objectives.
• Colleagues can join our Sharesave scheme on an annual basis for a
fixed three-year term. Membership for our 2023 offering was 36% of
the eligible population.
• All eligible colleagues are auto-enrolled into the Safestore Group
Personal Pension Plan provided through Aviva with a minimum
employer contribution rate of 4% of salary.
• Additional benefits include private healthcare cover, healthcare cash
plan, discounted gym membership, life insurance from day one of
employment, paid holiday allocation and a Cycle to Work scheme.
• Our family friendly policy means we offer new mothers twelve weeks’
full pay and new fathers 2 weeks’ full pay, as well as sending new
parents a beautiful gift when their child is born.
Working environment
• Our leadership teams have created an environment where our
managers and leaders are provided with the skills, tools and,
crucially, time to dedicate to their teams. This has been achieved
through maintaining good colleague–manager ratios; for example,
no Regional Manager oversees more than 12 stores.
• Our ‘Make the Difference’ people forum, launched in 2018, is a
formal workforce advisory panel which enables frequent
opportunities for us to hear and respond to our colleague voice. We
drive change and continuous improvement in responding to the
feedback we receive, via our internal communications channels and
through our network of People Champions.
• We have a comprehensive Colleague Assistance programme where
our teams can find guidance on coping strategies. They can speak
to a professional who is ready to support and guide them through
any concerns they have; in addition, for those who need it, they can
access up to 5 counselling sessions.
• We support a healthy work–life balance through offering a Company
sick pay scheme and encouraging all team members to take their rest
breaks. We welcome and consider all requests for flexible working
and at-home working, where appropriate.
• We know our people as individuals, and show respect for each other,
enabling everyone to have a voice so that they can bring their full,
unique selves to work.
• We are committed to providing an inclusive workplace and
encouraging and welcoming diversity with zero tolerance of
harassment and discrimination. More detail can be found in our
People Principles document online.
• Our strong wellbeing foundation has enabled us to develop a strategy
setting out our approach to further support diversity and inclusion
at Safestore.
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
Pay fairness continued
Development opportunities
• We have built an environment where it’s natural for us to give regular,
• Our Store Manager Development programmes offer the opportunity
honest feedback and to coach in the moment. We go beyond
mandatory training to promote life-enhancing learning where
everyone can continually evolve.
to gain a nationally recognised qualification from either the Institute of
Leadership & Management (“ILM”) or the Chartered Management
Institute (“CMI”) utilising the Apprenticeship Levy.
• In 2023, we invested over 28,000 hours into developing our people.
From online learning modules to face-to-face sales training, every
one of our colleagues can take part in structured learning.
• We offer health and safety training including first aid, forklift and
fire safety.
Recognition
• Our Senior Leadership Development programme ‘LEAD Academy’
supports a Level 5 Management and Leadership apprenticeship.
• Furthermore, our Graduate programme provides an opportunity for
newly qualified graduates to build their skill set and experience into a
career with Safestore.
• We recognise great performance and behaviours through our
• Our annual pay review/bonus schemes are based on individual
annual appraisal process.
performance ratings.
• Our values, created by our store teams, are at the heart of
• We also reward our sales consultants for completion of training
everything the organisation does.
modules through a pay-for-skills approach.
• The values are accompanied by a set of behaviours and everyone is
assessed against these every 6 months.
Informing the Committee on the wider workforce
To build the Remuneration Committee’s understanding of reward arrangements applicable to the wider workforce, the Committee is provided
with data on the remuneration structure for management level tiers below the Executive Directors and pay outcomes for these roles, as well as
comparable benchmarking information. The Committee also reviews feedback from the formal workforce advisory panel, in addition to the
Investors in People survey, which provides further context in relation to pay and conditions throughout the organisation and supports the
Committee in making decisions on future pay outcomes in line with the Policy. The Committee uses this information to ensure consistency and
fairness of approach throughout the Company in relation to remuneration.
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Alignment with Provision 40 of the Corporate Governance Code and Company strategy
The table below sets out how the current Policy addresses the factors in Provision 40 of the Corporate Governance Code, the objective of which
is to ensure that the remuneration arrangements operated by the Company are aligned to all stakeholder interests including those of shareholders.
Factor
How this was addressed in the Remuneration Policy
Clarity
Remuneration arrangements should be transparent and promote
effective engagement with shareholders and the workforce.
This was addressed through our commitment to full transparency and
engagement with our shareholders in relation to the Policy.
The Company engages directly with the broader colleague population on
their remuneration through a variety of methods including the workforce
advisory panel and town hall events led by the CEO.
Simplicity
Remuneration structures should avoid complexity and their rationale and
operation should be easy to understand.
Taking on board shareholder feedback, we designed a new LTIP for our
2023 Policy which is well understood by shareholders who inputted on its
construct throughout the extensive shareholder consultation process.
Risk
Remuneration arrangements should ensure reputational and other risks
from excessive rewards, and behavioural risks that can arise from
target-based incentive plans, are identified and mitigated.
Identified risks have been mitigated as follows:
• deferring an element of bonus into shares and requiring a two-year
holding period for LTIP share awards helps ensure that the
performance related awards are sustainable and thereby discourages
short term behaviours;
• aligning any reward to the agreed strategy of the Company;
• reducing the awards or cancelling them through malus and claw-back
provisions if the behaviours giving rise to the awards are
inappropriate; and
• reducing annual bonus or LTIP awards or cancelling them, if it
appears that the criteria on which the awards were based do not
reflect the underlying performance of the Company.
Predictability
The range of possible values of rewards to individual Directors and any
other limits or discretions should be identified and explained at the time
of approving the Policy.
The Remuneration Policy in the 2023 Notice of General Meeting sets out
the potential remuneration available in several performance scenarios.
The Committee is comfortable that the discretions available to it as set
out in the current Policy are sufficient.
Proportionality
The link between individual awards, the delivery of strategy and the long
term performance of the Company should be clear. Outcomes should
not reward poor performance.
One of the key strengths of the current approach of the Company to
remuneration is the direct link between strategy and the value received by
Executive Directors.
Please see the schematic below which sets out in detail the link
between Company strategy and the performance measures in the
current incentive arrangements.
Alignment to culture
Incentive schemes should drive behaviours consistent with Company
purpose, values and strategy.
The LTIP rewards long term sustainable performance which is a key
tenet of the Company’s strategy, purpose and values as set out in our
sustainability report on page 44.
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
Pay fairness continued
Alignment with Provision 40 of the Corporate Governance Code and Company strategy continued
In line with the proportionality factor from Provision 40 of the Corporate Governance Code set out above, the Committee designed the incentive
arrangements such that they were closely aligned with Company strategy as set out in the schematic below:
Optimising the trading
performance of existing portfolio
Maintaining a strong and
flexible capital structure
Selective portfolio management
and expansion opportunities
What does success look like?
• First‑class digital marketing
expertise
• Motivated and effective store teams
benefiting from improved training
and coaching
• Central revenue management and
cost control
• A capital structure appropriate for
our business
• Flexibility to take advantage of
carefully evaluated development and
acquisition opportunities
• Successful store openings
• Strong pipeline for future openings
• External recognition of ESG efforts
How do we measure progress against our objectives?
Annual
bonus
Strategic and
operational
Financial
• Independent customer
service survey
• People engagement survey results
• Assessment of online
marketing enhancement
• Occupancy management
enhancement
• Free cash flow
• Key capital cover ratios
• Increased ability to pay dividends
• Successful store openings on
time/budget
• Strong pipeline for future openings
• Increased portfolio valuation
All feed through to KPI = EBITDA growth
LTIP
• Continued successful execution of strategy should lead to shareholder value creation measured over three years by Adjusted
EPRA EPS growth, increase in net MLA, progress against our ESG strategy and TSR relative to FTSE 250 and sector peers
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Safestore Holdings plc | Annual report and financial statements 2023
Pay relativities
Internal – CEO pay ratio
Our CEO to colleague pay ratios for 2023 are set out in the table below. We also provide the 2019–2022 data for comparison purposes.
Financial year Method used
25th percentile pay ratio
50th percentile pay ratio
75th percentile pay ratio
2019
2020
Option B (gender pay
gap data)
Option B (gender pay
gap data)
60:1
55:1
37:1
Total pay and benefits: £19,067
Total pay and benefits: £20,669
Total pay and benefits: £31,278
Salary: £17,197
Salary: £18,175
Salary: £25,029
49:1
41:1
32:1
Total pay and benefits: £22,820
Total pay and benefits: £27,244
Total pay and benefits: £34,857
Salary: £18,500
Salary: £24,240
Salary: £30,852
2021
Option A
554:1
500:1
365:1
Total pay and benefits: £23,502
Total pay and benefits: £26,019
Total pay and benefits: £35,686
Salary: £19,540
Salary: £19,540
Salary: £28,829
20221
Option A
349:1
312:1
227:1
Total pay and benefits: £24,031
Total pay and benefits: £26,849
Total pay and benefits: £36,939
Salary: £20,300
Salary: £21,100
Salary: £30,556
2023
Option A
53:1
48:1
36:1
Total pay and benefits: £24,866
Total pay and benefits: £27,499
Total pay and benefits: £37,270
Salary: £22,200
Salary: £22,700
Salary: £34,500
Note:
1 2022 ratios have been updated in line with the restated CEO single figure of remuneration for 2022.
Since 2021, the Company has chosen methodology Option A for the calculation, which takes into consideration the full-time equivalent basis of
all UK employees and provides a representative result of employee pay conditions across the Company. In 2019 and 2020, the Company used
methodology Option B. However, given the guidance by several shareholders that Option A is preferred, we updated our methodology to
maintain market best practice disclosures.
The CEO remuneration figure is as shown in the Executive Directors’ remuneration table on page 110. The remuneration figures for the employee
at each quartile were determined as at 31 October 2023. Each colleague’s pay and benefits were calculated using each element of employee
remuneration, consistent with the CEO, pro-rated to be on a full-time equivalent basis. This therefore included the following elements of pay:
• base salary;
• private medical insurance;
• car/car allowance;
• fuel allowance;
• employer pension contribution;
• annual bonus;
• overtime and extra pay;
• 2021 LTIP (including estimate of relative TSR element); and
• Sharesave.
No components of pay have been omitted. The following estimates and adjustments were made:
• For new joiners, salary and benefits were annualised and bonus was calculated based on average payout for the relevant store.
• For colleagues on the annual bonus scheme, awards were estimated based on expected outcomes.
• Adjustments were made to achieve full-time equivalent rates.
The Committee notes that the 2023 median ratio is lower than in 2021 and 2022 due to the CEO’s single figure of remuneration being significantly
lower than in those years. This is because the 2021 LTIP payouts are expected to be significantly lower than those of the 2017 LTIP, given the
reduced award levels. The Committee notes that the 75th percentile employee is below the seniority to receive a 2020 or 2021 LTIP award and
therefore payouts to c. 70 participants do not get captured within this ratio.
The above analysis demonstrates that the ratio is driven by the different structure of our CEO’s pay versus that of our colleagues, as well as the
composition of our workforce. This ratio varies between businesses even in the same sector. What is important from our perspective is that this
ratio is influenced only by the differences in structure, and not by divergence in fixed pay between the CEO and the wider workforce.
The Committee considers the 50th percentile pay ratio to be consistent with pay and progression policies for UK colleagues.
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
Pay relativities continued
Diversity pay gap reporting
We are committed to providing an inclusive workplace and encouraging and welcoming diversity with zero tolerance of harassment and
discrimination. More detail can be found in our People Principles document (which can be found in the governance section of our website).
Building a diverse and inclusive workplace is a top priority for us. Our already strong wellbeing foundation has enabled us to develop a strategy
setting out our approach to further support diversity and inclusion at Safestore. Our new Diversity and Inclusion Strategy is about embedding
and continuing the important work we’ve already done to enable all our colleagues to feel confident to bring their full, unique selves to work.
At Safestore, all colleagues are paid equally for doing the same or similar work. Our bonus schemes are open to all job levels and colleagues at
the same level have the same bonus opportunity.
This year we were pleased to publish our first ever Diversity Pay Gap Report, which includes ethnicity and gender data. We have chosen to
voluntarily report on our ethnicity pay data, because we believe this is an important step on our diversity and inclusion journey. We know there is
still work to do to reduce our pay gaps. Our ethnicity pay gap of 7.7% remains above the latest national ethnicity pay gap of 2.3%2. This gap tells
us that there is still an under-representation of Black, Asian and ethnic minority colleagues in higher paid roles. However, many of our colleagues
have not yet shared their ethnicity information, which does limit our ability to see the wider picture. Encouraging our colleagues to disclose their
ethnicity, and addressing any barriers to doing so, remains a key focus for us. Our median gender pay gap of 7.9% is significantly below the
UK average of 14.9%1. We currently have more men than women in senior leadership positions that attract higher levels of pay; this, therefore,
contributes to our gender pay gap. We also know that women are under-represented in some industries from which we recruit, such as property
and construction.
Highlights include:
• Our median gender pay gap of 7.9% is significantly below the UK average of 14.9%1.
• We can see that women at Safestore are progressing to more senior levels, as the level of female representation in our upper pay quartiles is
up by 3.4ppts this year and has slightly reduced in the lower pay quartile.
• We know that, at our sales colleague level, our mean ethnicity pay gap is 2.2%2.
Notes:
1 Gender pay gap in the UK: 2022, ONS.gov.uk.
2 Ethnicity pay gaps: 2019, ONS.gov.uk.
Remuneration justification
The Committee is comfortable that the internal and external pay relativity reference points provide justification that the new Policy is appropriate,
as set out in the Chairman’s statement.
Communication with colleagues
During the year, we communicated with colleagues and gathered their feedback in a number of ways as set out below:
Workforce advisory panel: As set out in the Committee Chair’s statement, in 2018 the Company established a formal workforce advisory panel
to facilitate engagement with colleagues. The panel has now been successfully embedded in the business. Our 15 People Champions have
continued to engage directly with the CEO across a wide range of subjects including remuneration. Appropriate feedback from these sessions
was presented to the Remuneration Committee, which the Committee considered when determining the remuneration levels for Executive
Directors in 2023. In addition, over the past few years feedback from the panel has resulted in the Remuneration Committee and Board
approving improved colleague benefits such as enhanced Company sick pay, improved healthcare provision, and more frequent opportunities to
participate in all-colleague share schemes.
CEO town hall events: The CEO also ran 2 virtual town hall sessions where colleagues had the opportunity to raise questions, discuss business
issues, and provide feedback on subjects including remuneration. As part of these events, colleagues were engaged on how the Executive
Directors’ Remuneration Policy aligned with the wider Company pay policy.
Colleague survey: Our management team and the workforce advisory panel reviewed the recommendations from our 2021 Investors in People
colleague survey, establishing improvements made and agreeing further actions with the aim of maintaining our leadership engagement score of
over 90%.
Communication with shareholders
The table below shows the results of the latest shareholder votes on the Directors’ remuneration report and Policy resolutions:
Votes for
%
Votes against
%
Votes withheld
2023 AGM vote on annual report on remuneration
140,636,482
74.66
47,726,385
25.34
354,337
2023 GM vote on Remuneration Policy
178,517,273
97.40
4,769,130
2.60
2,815,021
Please refer to the Chairman’s statement which sets out the shareholder engagement undertaken by the Committee over the past year in relation
to our remuneration strategy. The Committee was delighted to see that the 2023 Remuneration Policy was positively received by our
shareholders and would like to thank all our shareholders and the investor bodies for their constructive feedback provided through an extensive
engagement process conducted over the year, and for showing their overwhelming support at our General Meeting.
108
Safestore Holdings plc | Annual report and financial statements 2023
Chief Executive Officer and colleague pay
Total shareholder return and Chief Executive Officer pay over the last ten years
The chart shows the performance of a hypothetical investment of £100 in ordinary shares (as measured by the TSR for the Company) against the
FTSE 250 and FTSE 350 Supersector Real Estate Index over a period of ten financial years starting from 31 October 2013 through to 31 October
2023. The FTSE 250 has been selected as an appropriate comparison index due to Safestore’s ranking within the FTSE in terms of market
capitalisation. The FTSE 350 Supersector Real Estate Index has been selected as an appropriate comparator group as its major sector
competitors are constituents of this index.
The chart also shows the increase in Adjusted Diluted EPRA (“ADE”) Earnings per Share from 31 October 2013 onwards (see right-hand scale).
Total shareholder return and Adjusted Diluted EPRA (“ADE”) Earnings per Share (pence)
1,100
1,000
)
£
(
l
e
u
a
V
R
S
T
900
800
700
600
500
400
300
200
100
0
60
50
40
30
20
10
0
)
e
c
n
e
p
(
S
P
E
E
D
A
31/10/2013
31/10/2014
31/10/2015
31/10/2016
31/10/2017
31/10/2018
31/10/2019
31/10/2020
31/10/2021
31/10/2022
31/10/2023
Safestore Holdings plc
FTSE 250 Index
FTSE 350 Supersector Real Estate Index
ADE EPS
The chart also illustrates that the sustained EPS growth has resulted in significant TSR outperformance which is reflected in the bonus payouts
and vesting of the long term incentive awards over several years.
Oct 2014
Oct 2015
Oct 2016
Oct 2017
Oct 2018
Oct 2019
Oct 2020
Oct 2021
Oct 2022
Oct 2023
Role
CEO
CEO
CEO
CEO
CEO
CEO
CEO
CEO
CEO
CEO
F Vecchioli
F Vecchioli
F Vecchioli
F Vecchioli
F Vecchioli
F Vecchioli
F Vecchioli
F Vecchioli
F Vecchioli
F Vecchioli
Single figure of total
remuneration (£’000)
Annual bonus
payout (% of max)
LTIP earned
(% of max)
973
1,224
1,481
1,728
1,719
1,134
1,108
13,020
8,385
1,325
76%
100%
100%
82%
81%
91%
100%
100%
100%
0%
96%
100%
100%
100%
100%
n/a
n/a
100%
100%
95%1
Note:
1 Estimated outcome as at 31 October 2023.
Safestore Holdings plc | Annual report and financial statements 2023
109
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
Pay relativities continued
Percentage change in Executive Director, Non-Executive Director and colleague remuneration
The table below shows the percentage change in remuneration of the Directors undertaking the roles of Chief Executive Officer, Chief Financial
Officer and Non-Executive Directors, together with average pay of the Company’s colleagues in the listed entity on a full-time equivalent basis.
% change from 2022 to 2023
% change from 2021 to 2022
% change from 2020 to 2021
% change from 2019 to 2020
Base
salary/
fees
5%
5%
12%
5%
5%
15%
5%
127%
n/a
8.5%
Benefits
Annual
bonus
3% (100)%
5% (100)%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Base
salary/
fees
4%
4%
10%
19%
14%
n/a
n/a
n/a
n/a
0% (100)%
6.9%
Benefits8
(3%)
2%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0%
Annual
bonus
Base
salary/
fees1 Benefits
Annual
bonus
Base
salary/
fees
Benefits
3%
3%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
3%
3%
19%
22%
175%
n/a
n/a
n/a
n/a
8.8%
4.2%
0%
0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0%
5%
5%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1%
1%
n/a
1%
n/a
n/a
n/a
n/a
n/a
20%
2.3%
0%
0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0%
Annual
bonus
11%
11%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
19%
F Vecchioli (CEO)
A Jones (CFO)
D Hearn (NE Chair)2
I S Krieger (NED)
G van de Weerdhof
(NED)3
L Duhot (NED)4
D Mousseau (NED)5
J Bentall (NED)6
A Darzins7
Colleague pay
Notes:
1
The increases in 2021 to Non-Executive Director fees are a result of the increase to the base fee and Committee chairmanship fees and the Company starting to pay a Senior Independent
Director fee of £10,500. All increases were effective 1 May 2021.
2 The Chairman was appointed on 1 December 2019 so received a pro-rated fee for 2020.
3 G van de Weerdhof was appointed on 1 June 2020 so received a pro-rated fee for 2020.
4 L Duhot was appointed as an independent Non-Executive Director on 1 November 2021.
5 D Mousseau was appointed as an independent Non-Executive Director on 1 November 2021.
6
J Bentall was appointed as an independent Non-Executive Director on 18 May 2022 so received a pro-rated fee for 2022.
7 A Darzins was appointed as an independent Non-Executive Director on 1 September 2023 so received a pro-rated fee for 2023.
8 F Vecchioli received dental insurance for two-twelfths of the year only.
Relative importance of spend on pay
The table below sets out the overall spend on pay for all colleagues compared with the returns distributed to shareholders.
Significant distributions1
Colleague costs (£’m)
Distributions to shareholders in the form of shareholder dividends and share buybacks (£’m)
Notes:
1 The above figures are taken from notes 10 and 26 to the financial statements.
2 The reduction is due to lower share-based payments and bonus awards in 2023.
2023
30.0
65.9
2022
38.1
56.9
% change
(21.3)% 2
15.8%
Executive Director remuneration for the year ended 31 October 2023
Single figure remuneration table (audited)
The remuneration of Executive Directors showing the breakdown between components with comparative figures for the prior financial year is shown below.
Base salary
£’000
Taxable
benefits1
£’000
Annual
Long term
bonus2
£’000
incentives 3,4
£’000
Pension5
£’000
Other6
£’000
F Vecchioli (Chief
Executive Officer)
A Jones (Chief
Financial Officer)
2023
2022
2023
2022
468
448
334
319
24
23
20
19
0
682
0
486
814
7,195
580
4,860
19
18
14
13
0
19
0
19
Total
£’000
1,325
8,385
948
5,716
Total fixed
remuneration
£’000
Total variable
remuneration
£’000
511
489
368
351
814
7,896
580
5,365
Notes:
1 Taxable benefits comprise a car allowance, private medical and dental insurance.
2 The 2022 annual bonus figures include the portion subject to deferral into restricted shares.
3
4
5
6
The 2023 figure is the outcome of the 2021 LTIP noting that the performance period for the TSR element will end on 27 January 2024, i.e. it has been substantially completed and therefore an
estimate of the vesting of this element has been included. The 2021 LTIP outcome has been valued based on the three-month average share price to 31 October 2023 of £7.82 and includes
dividend equivalents accrued from the date of grant to 31 October 2023. Please see page 116 for further detail on the amount of the LTIP value attributable to share price appreciation.
The 2022 figure is the aggregate of the outcomes under the 2017 LTIP relative TSR element and the 2020 LTIP (which has been restated). The 2017 LTIP relative TSR element is valued as
at the vesting date, i.e. based on the closing share price on 29 September 2022 of £7.94, and includes dividend equivalents of £0.9665 per share accrued from the date of grant to the
date of vest. The 2020 LTIP is valued as at the vesting date, i.e. based on the closing share price on 18 March 2023 of £9.45, and includes dividend equivalents accrued from the date of
grant to the date of vest. Please see page 116 of the 2022 DRR for further detail on the amount of the 2017 LTIP values attributable to share price appreciation.
The pension contribution rate is 4.1% of salary in line with the average workforce pension contribution. No Executive Directors participate in a Group defined benefit or final salary pension scheme.
The other column refers to maturity of the 2019 (3YR) Sharesave awards. The value for 2022 has been calculated as the gain in excess of the 510 pence exercise price at the maturity date
of 1 September 2022.
110
Safestore Holdings plc | Annual report and financial statements 2023
Annual bonus outcomes for the financial year ended 31 October 2023 (audited)
For 2023, the Executive Directors had a maximum annual bonus opportunity of 150% of salary. For each Executive Director, the 2023 annual
bonus measures were weighted two-thirds for adjusted EBITDA (excludes all leasehold rent charges and non-recurring items) and one-third for
strategic/operational measures.
Given the tough operating environment and the challenging targets set by the Committee, the Company narrowly failed to meet the adjusted
EBITDA threshold level of performance such that there will be no payout under the financial element of the bonus. Under the Policy, on the
basis that the threshold performance level under the EBITDA measure was not achieved, no payout can be made under the strategic/operational
measures, such that the Remuneration Committee was not formally required to test achievement under this element for 2023. However, in line
with our commitment to provide transparency in relation to the strategic/operational bonus element we have set out below a summary of these
measures and their achievement for 2023 in addition to details of the targets and actual performance for the EBITDA measure and resulting
bonus payment for each Executive Director.
Measure
Weighting
Threshold
(20% payout)
On target
(50% payout)
Maximum
(100% payout)
% of element
Actual
payable
Achievement as
% salary
Bonus value
£’000
Achievement as
% salary
Bonus value
£’000
Performance required
Actual performance
CEO
CFO
Adjusted
EBITDA1
Strategic/
operational
measures
Two-
thirds
One-
third
£144.8m
£149.2m
£152.2m
£142.1m
0%
Objectives based on
strategic/operational
See below
0%
0%
0%
0
0
0%
0%
Total bonus achieved in 2023
0%
0
0%
0
0
0
Note:
1
Adjusted EBITDA excludes all leasehold rent charges and non-recurring items, and is equivalent to the reported EBITDA in the financial statements with European results translated at the
budget Euro exchange rate of 1.15.
2023 annual bonus outcomes: strategic objectives
The Group’s proven strategy remains unchanged. We believe that the Group has a well-located asset base, management expertise,
infrastructure, scale and balance sheet strength to exploit the current industry dynamics. As we look forward, we consider that the Group has the
potential to further increase its EPS 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. Therefore, the Executive Directors’ strategic/
operational objectives reflect the Company’s priorities in these areas for 2023 as well as the Company’s ESG performance.
Objective
Achievement
Outcome
Optimisation of performance of existing portfolio (20% of salary)
Enhancing people
performance through
engagement and
improved capabilities in
order to increase
conversion of enquiries
into new lets.
Enhance website
performance to drive
new lets and marketing
spend in line with
budgeted expectations.
As an Investors in People Platinum accredited organisation, our focus on our colleagues
and culture has enabled us to continue to deliver sustainable business performance.
Highlights included:
• continuing to prioritise the health and wellbeing of our colleagues and our customers;
• increasing the number of hours spent on training across the business to over 28,000;
• recruiting additional key roles to support the business for future growth; and
• making 18 internal promotions from 2022 to 2023.
Delivered improvements to current website platforms:
• onboarded Germany to Safestore Web platform;
• developed a fully online booking and contracting process and commenced testing
and iteration;
• revamped store pages;
• tested alternative marketing attribution model; and
• identified technology and development partner for next iteration of website
platform (FY24).
indicates that the objective was exceeded,
indicates that it was met,
indicates that it was partially achieved and
shows that the
objective was not achieved.
Safestore Holdings plc | Annual report and financial statements 2023
111
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
2023 annual bonus outcomes: strategic objectives continued
Objective
Achievement
Outcome
Optimisation of performance of existing portfolio (20% of salary) continued
Leverage Group
knowledge, experience
and resources to
improve productivity
and drive efficiencies.
Highlights included:
• full pricing model rolled out to all territories including Germany;
• three-way contracts rolled out to new geographies after successful development
in the UK;
• development of a Construction Analytics function, delivering improved construction
cost control across the Group;
• transitioned IT support for all territories to our internal, centralised and multi-lingual
IT support team;
• developed and integrated multiple technologies to enable our first fully
unmanned stores; and
• expansion of acquisition teams to grow store portfolio.
Strong and flexible capital structure (9% of salary)
Ensure the financial
flexibility exists to deliver
selected development
and acquisition
opportunities whilst
maintaining conservative
leverage and a
progressive
dividend policy.
The Company’s strong capital structure continued to allow it to take advantage of
opportunities across the Group in order to deliver incremental earnings growth over the
longer term.
Highlights included:
• On 11 November 2022, the Group completed the refinancing of its RCFs which were
due to expire in June 2023. The previous £250 million Sterling and €70 million Euro
RCFs were replaced with a single, unsecured four-year £400 million multi-currency
revolving facility. In addition, a further £100 million uncommitted accordion facility is
incorporated in the facility agreement, which increases funding capacity, allowing us to
continue to consider strategic, value-accretive investments as and when they arise.
The facility is for a four-year term with two one-year extension options exercisable after
the first and second years of the agreement. The first extension has recently been completed.
• Group leverage was below the Group’s strategic targeted level of an LTV ratio between
30–40% (25.4% for 2023).
• The full year dividend for the year ended 31 October 2023 increased by 1%
demonstrating a continued progressive dividend policy.
indicates that the objective was exceeded,
indicates that it was met,
indicates that it was partially achieved and
shows that the
objective was not achieved.
112
Safestore Holdings plc | Annual report and financial statements 2023
Objective
Achievement
Outcome
Take advantage of selective portfolio management and expansion opportunities (15% of salary)
Grow store portfolio
through development
or acquisition by at least
2 stores per year within
the Board-approved
ROI guidelines.
Improve property
valuations of the stores
in the refurbishment and
extension programme
by more than the capital
investment.
Joint Venture to enter the German market. Started with 7 leasehold stores but
since acquired the freehold of one of the stores and exchanged contracts on 2 further
freehold opportunities.
Acquired new development opportunities in the UK, Spain and the Netherlands, in addition
to opening new stores and completing store extensions in various locations.
Highlights included:
Redevelopments and extensions:
• London – Crayford
• London – Paddington Marble Arch
New developments:
• London – Morden – New build
• Wigan – Conversion
• Madrid North – Conversion
• Madrid South – Conversion
• Madrid East – Conversion
• Barcelona North – Conversion
• Barcelona South – Conversion
• Barcelona Central – Conversion
• Netherlands Amersfoort – New build
• Ellesmere Port – New build
Property pipeline summary of c. 1.5 million sq ft representing c. 19% of our existing
property portfolio can be found on page 14.
indicates that the objective was exceeded,
indicates that it was met,
indicates that it was partially achieved and
shows that the
objective was not achieved.
Safestore Holdings plc | Annual report and financial statements 2023
113
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
2023 annual bonus outcomes: strategic objectives continued
Objective
Achievement
Outcome
ESG (6% of salary)
Improve the Group’s
ESG activities in order
to deliver real value to
all our stakeholders by:
• year-on-year carbon
footprint reduction;
and
• customer satisfaction
initiatives.
Align sustainability
reporting with
appropriate
framework(s).
Continued progress on our commitment to responsible and sustainable business practices.
Highlights included:
• delivered year-on-year carbon emissions intensity reduction through efficiency and
electrification initiatives versus 2022 including the fully acquired Benelux portfolio;
• market-based absolute emissions 17% lower year on year (emissions intensity also
below 2023 target);
• gas removed from 32 UK stores on track for our 2030 target to remove gas use entirely;
• 100% diversion of construction waste from landfill;
• 100% operational waste diversion;
• maintained positive ratings on all relevant customer service platforms:
• Feefo Platinum Trusted Service award for Safestore UK;
• Trustpilot ‘Excellent’ rating achieved in the UK with a Trustpilot ‘Great’ rating
maintained in France;
• average Google rating of 4.7 achieved in Spain; and
• in the Netherlands, a high score of 4.9 was achieved on Trustpilot, whilst in Belgium,
customer service was rated 4.7 on Feefo; and
• external recognition of ESG efforts and disclosures: EPRA Sustainability BPR Silver
Award, GRESB Public Disclosure A, MSCI ESG ‘AA’ and Support the Goals – 5*.
Our strong wellbeing foundation has enabled us to develop a strategy setting out our
approach to further support diversity and inclusion at Safestore. Our Diversity and Inclusion
Strategy is about embedding and continuing the important work we’ve already done to
enable all our colleagues to feel confident to bring their full, unique selves to work.
indicates that the objective was exceeded,
indicates that it was met,
indicates that it was partially achieved and
shows that the
objective was not achieved.
Given that the threshold performance level under the EBITDA measure was not achieved, the formulaic outcome for the 2023 Executive Director
bonus is nil. Despite there being nil annual bonus for the year, the Committee acknowledged the management team’s excellent performance,
particularly in relation to the strategic progress made during the year which will create long term value for our shareholders. However, the
Committee determined that it should not exercise its discretion to adjust the formulaic bonus outturn as it was aligned with the shareholder
experience over 2023.
114
Safestore Holdings plc | Annual report and financial statements 2023
LTIP awards included in single figure for the year ended 31 October 2023 (audited)
2021 LTIP – EPS and Relative TSR element performance measurement
For the 2021 LTIP, the Executive Directors were granted an LTIP award equal to a maximum of 200% of salary.
The performance period of the EPS element of the 2021 LTIP ended on 31 October 2023; EPS performance accounts for two-thirds of the
award. On that basis, the Committee measured the Company’s EPS growth and Cash on Cash Return in relation to the underpin over the
three-year performance period. Adjusted Diluted EPRA EPS increased by 16.6% p.a., significantly ahead of the 8% p.a. growth required for
maximum vesting. The average Cash on Cash Return over the same period was 11.9% which also exceeded the 8% underpin target resulting in
100% of the awards being earned under the EPS element of the 2021 LTIP.
This is summarised in the table below:
Adjusted Diluted EPRA EPS growth2
Threshold
performance1
(25% vesting)
Maximum
performance
(100% vesting)
Actual
performance
% of awards
earned
Underpin
performance
required
Actual performance
Overall % of
awards earned
Cash on Cash Return underpin3
5% p.a.
8% p.a.
16.6% p.a.
100%
8%
11.9%
100%
Notes:
1
Vesting between threshold and maximum based on a sliding scale.
2
Adjusted Diluted EPRA Earnings per Share 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).
3
Cash on Cash Return p.a. is the average Cash on Cash Return over the performance period, where Cash on Cash Return is Underlying EBITDA after leasehold rent divided by original
cost of investments calculated for each financial year in the performance period.
The final vesting level for the 2021 LTIP will not be determined by the Committee until the vesting date of 28 January 2024, with the balance of
awards subject to the Company’s relative TSR performance measured over the three-year period ending on 27 January 2024. Half of the TSR
element of the awards are measured relative to the FTSE 250 excluding Investment Trusts, and the other half to the FTSE 350 Supersector Real
Estate Index, with threshold and maximum vesting for median and upper quartile TSR growth versus the peer groups respectively.
As at 31 October 2023, Safestore’s TSR growth is between the median and upper quartile of the FTSE 250 excluding the Investment Trusts Index
and above the upper quartile of the FTSE 350 Supersector Real Estate Index, which would equate to around 85% vesting under the relative TSR
measure. Therefore, the Committee confirms that, based on performance to date and taking account of the EPS element, it expects the 2021
LTIP awards to vest at around 95% of maximum and will consider whether the formulaic outcome is in line with underlying Company
performance at the vesting date.
The value of the 2021 LTIP awards expected to vest on 28 January 2024, plus an estimate of the value of dividend equivalents accrued to 31
October 2023, has been included in the single figure of remuneration table for 2023 on the basis that the relative TSR performance period has
been substantially completed. On the assumption that the relative TSR element vests at c. 85% of maximum, the CEO and CFO will earn 96,240
and 68,571 shares respectively which will become exercisable on or after the vesting date of 28 January 2024.
Dividend equivalents will also be awarded on vested shares based on dividends between the grant and vesting date of the award. In line with the
reporting regulations, an estimate of the value of dividend equivalents between the grant date and 31 October 2023 has been included in the
value of the awards in the single figure of remuneration table as set out on page 110.
Restatement of LTIP awards included in single figure for the year ended 31 October 2022 (audited)
The three-year performance period for the relative TSR element of the 2020 LTIP ended on 17 March 2023; relative TSR accounts for one-third of
the award with 50% of the element measured against the constituents of the FTSE 250 Index excluding Investments Trusts and the remaining
50% against the FTSE 350 Supersector Real Estate Index.
Safestore’s TSR growth was 34.2% over the three-year performance period to 17 March 2023 and was significantly in excess of the upper
quartile of both peer groups (21.6% and -7.3% for the FTSE 250 Index excluding Investment Trusts and FTSE 350 Supersector Real Estate Index
respectively), which equates to maximum vesting. Given that the Committee confirmed that the Cash on Cash Return underpin had been
satisfied as at 31 October 2022, the performance targets under the relative TSR element of the 2020 LTIP were met in full. This is summarised in
the table below:
TSR vs FTSE 250 Index excluding Investment Trusts
TSR vs FTSE 350 Supersector Real Estate Index
Threshold
performance –
median TSR
(25% vesting)
Maximum
performance –
upper quartile TSR
(100% vesting)
Safestore’s TSR
performance
% of awards
vested
Threshold
performance –
median TSR
(25% vesting)
Maximum
performance –
upper quartile TSR
(100% vesting)
Safestore’s TSR
performance
% of awards
vested
-7.8%
21.6%
34.2%
100%
-17.8%
-7.3%
34.2%
100%
Safestore Holdings plc | Annual report and financial statements 2023
115
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
2023 annual bonus outcomes: strategic objectives continued
LTIP awards included in single figure for the year ended 31 October 2023 (audited) continued
Restatement of LTIP awards included in single figure for the year ended 31 October 2022 (audited) continued
Therefore, in total, 123,489 shares for the CEO and 87,986 shares for the CFO vested under the 2020 LTIP and became exercisable on 18 March 2023.
The CEO and CFO also became entitled to 9,658 and 6,881 dividend equivalent shares respectively.
The value of the awards that vested under the 2020 LTIP included in the single figure of remuneration table for the year ended 31 October 2022
has been restated to include the actual dividend equivalents earned during the vesting period, valued at the share price on vesting.
The Committee determined that the formulaic vesting outcome was aligned with the Company’s underlying performance on the basis that:
• the Group’s profits, as measured by EPS, and its share price had increased to a similar extent over the performance period; and
• the Group’s financial success had been achieved in parallel with it receiving several accolades in relation to its colleague initiatives, ESG
performance, and consistently outstanding customer feedback scores.
In line with best practice, the Committee also debated whether any windfall gains had been received as a result of the 2020 LTIP vesting and
noted that:
• the grant price of the award (£6.74) was 54% higher than the grant price of the previous LTIP award (i.e. the 2017 award) and was only 3%
below the average share price over the 12 months prior to the grant date;
• had an LTIP grant been awarded in mid-March 2019, the share price at grant would have been around £6. This would mean that the grant
price of the 2020 LTIP would have been 13% higher than this price; and
• Safestore significantly outperformed its peers in terms of TSR over the performance period.
As such, the Committee determined that no overriding discretion will be applied to the 2020 LTIP outcome.
Taking these factors into consideration, the Committee determined that participants had not benefited from a windfall gain and therefore, in line
with the formulaic outcome, 100% of the 2020 LTIP awards vested on 18 March 2023. The Executive Directors’ awards are also subject to a
two-year post-vesting holding period.
2022 figures (restated)
Number of
2020 LTIP
awards
granted
Number of
2020 LTIP
awards
vested
Number of
2020 LTIP
dividend
equivalent
shares
Value of
2020 LTIP
awards
vested 1
Value
attributable
to share
price
growth2
Number of
2021 LTIP
awards
granted
Number of
2021 LTIP
awards
estimated
to vest
2023 figures
Estimated
number of
2021 LTIP
dividend
equivalent
shares
Value of
2021
LTIP awards
estimated
to vest 3
Value
attributable
to share
price
growth 4
123,489
123,489
9,658
£1,257,573
£334,038
101,465
96,240
7,935
£814,369
87,986
87,986
6,881
£896,019
£238,002
72,294
68,571
5,654
£580,240
£0
£0
Name
F Vecchioli (Chief Executive
Officer)
A Jones (Chief Financial
Officer)
Notes:
1 Based on the closing share price on 18 March 2023 of £9.445.
2
Based on growth in share price from date of grant (£6.74 being the closing share price on the dealing day immediately before the date of grant of 18 March 2020) to the closing share price
on the date of vest (£9.445 – 18 March 2023).
3 Based on three-month average share price to 31 October 2023 of £7.82.
4
Based on growth in share price from date of grant (£8.285 being the closing share price on the dealing day immediately before the date of grant of 28 January 2021) to three-month
average share price to 31 October 2023 (£7.82).
LTIP awards granted in the year ended 31 October 2023 (audited)
The first LTIP award under the new Remuneration Policy was granted on 12 July 2023. In line with the Policy, the CEO and CFO’s Base award
had a face value of 300% and 215% of base salary respectively with a maximum multiplier of 1.6x such that the overall maximum award was
480% and 344% of salary. No consideration was paid for the grant which was structured as a nil-cost option. The normal vesting date of the LTIP
awards will be 12 July 2026, being the third anniversary of the award date. Once vested, the LTIP award will normally be exercisable until the day
before the tenth anniversary of the award date and is subject to a two-year holding period commencing on vesting.
Name
F Vecchioli
A Jones
Role
CEO
CFO
Base salary at
date of grant
£481,853
£343,320
Face value
of 2023
LTIP award
(% of base salary)
Share
price
Face value
of 2023
LTIP award
Face value
at minimum
vesting1
Number of shares
granted under
nil-cost option2,3
480%
344%
£8.375
£2,312,890
£300,676
£8.375
£1,181,009
£153,531
276,166
141,016
Notes:
1 65% of the award has threshold vesting of 20% of maximum and 35% of the award has threshold vesting of nil.
2
The number of shares granted under the award was calculated using a share price of £8.375, being the closing share price on the dealing day immediately before the date of grant as
shown above.
3 Dividend equivalents will be payable on vested shares.
116
Safestore Holdings plc | Annual report and financial statements 2023
Performance measures and targets:
• Base award:
• 65% Adjusted Diluted EPRA EPS growth:
• Threshold (20% vesting) = 5% p.a. growth.
• 65% vesting = 7% p.a. growth.
• Strong (80% vesting) = 9% p.a. growth.
• Maximum (100% vesting) = 12% p.a. growth.
• Straight-line vesting in between performance levels.
• 25% strategic/operational measures:
• For 2023, the measure will be the aggregate net increase in Maximum Lettable Area (“MLA”) over the three financial years ending 31
October 2025:
• Threshold net increase (0% vesting).
• Target net increase (50% vesting).
• Maximum net increase (100% vesting).
• Straight-line vesting in between performance levels.
• Given the Board considers the targets set to be commercially sensitive, they will be disclosed retrospectively.
• 10% ESG measures:
• There are 2 measures for 2023 with equal weighting:
• 1. EPC ratings of developments and refurbishments at A or B:
• Threshold (0% vesting) 95% of developments and refurbishments.
• Target (50% vesting) 98% of developments and refurbishments.
• Maximum (100% vesting) 100% of developments and refurbishments.
• 2. Reduction in greenhouse gas emission intensity:
• Threshold (0% vesting) reduction to 1.03 kg CO2/m².
• Target (50% vesting) reduction to 0.93 kg CO2/m².
• Maximum (100% vesting) reduction to 0.89 kg CO2/m².
• The Committee has discretion to deal with acquisitions as appropriate. For example, acquisitions could be excluded from the
performance assessment, or the target could be reset in line with those published in future annual reports.
• Multiplier:
• If TSR performance is above the upper quartile of the FTSE 250 (excluding Investment Trusts) then the Base award vesting can be increased
by up to a maximum of 1.6x for upper decile performance as follows:
• Below upper quartile: Base award vesting increased by 1x (no increase to Base award).
• Upper quartile: Base award vesting increased by 1x (no increase to Base award).
• Upper decile or above: Base award vesting increased by 1.6x.
• Straight-line increase in multiplier vesting between upper quartile and upper decile relative TSR performance.
• Performance modifier:
• The awards are underpinned by a performance modifier whereby the number of LTIP awards vesting will be reduced by one-third, if
Safestore’s TSR over the three-year performance period is either below the median TSR of the FTSE 350 Supersector Real Estate Index,
or negative.
The Committee will have overriding discretion to change the formulaic outcome (both downwards and upwards) if it is out of line with the
underlying performance of the Company and this will include an assessment of whether any windfall gains have been made.
Note:
1
Adjusted Diluted EPRA Earnings per Share 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.
Safestore Holdings plc | Annual report and financial statements 2023
117
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
Annual bonus – deferred bonus restricted share awards made in the year ended 31 October 2023
In line with the Policy, the bonus awarded in excess of 100% of salary in respect of the year ended 31 October 2022 is held in shares by the
Executive Directors on a net of tax basis (referred to as restricted shares). The restricted shares are subject to a two-year holding period that
expires on 1 November 2024. Malus provisions apply during the holding period and claw-back provisions apply for three years thereafter. The
restricted shares were acquired by the Executive Directors on 30 January 2023 at market value of £10.079.
Name
F Vecchioli
A Jones
Note:
1 Dividends will be payable.
Role
CEO
CFO
Face value of
restricted shares
Number of
restricted shares 1
£117,975
£84,049
11,705
8,339
Operation of Policy
The Committee is comfortable that the Policy operated as intended in terms of Company performance and quantum in 2023 and that the overall
remuneration paid to Executive Directors for 2023, as set out above, was appropriate.
Payments to past Directors or for loss of office (audited)
During the year there were no payments to past Directors or for loss of office.
Implementation of the Remuneration Policy for the year ending 31 October 2024
Please see the at a glance section on pages 98 to 100 of this report for details.
Non-Executive Directors
Single figure remuneration table (audited)
The remuneration of Non-Executive Directors showing the breakdown between components, together with comparative figures for the prior year,
is shown below.
Director
D Hearn
I S Krieger
G van de Weerdhof
L Duhot1
D Mousseau
J Bentall2
A Darzins3
Fees
£’000
227
203
82
78
59
57
71
61
59
57
59
26
10
—
Other
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Notes:
1 L Duhot was appointed Remuneration Committee Chair on 1 June 2022 so received a pro-rated Committee fee for 2022.
2
J Bentall was appointed as an independent Non-Executive Director on 18 May 2022 so received a pro-rated fee for 2022.
3 A Darzins was appointed as an independent Non-Executive Director on 1 September 2023 so received a pro-rated fee for 2023.
Fees to be provided in 2024 to the Non-Executive Directors
The following table sets out the annual fee rates for the Non-Executive Directors from 1 May 2023:
Fee component
Chairman fee
Non-Executive Director base fee
Additional fee for SID and Committee chairmanship
118
Safestore Holdings plc | Annual report and financial statements 2023
Total
£’000
227
203
82
78
59
57
71
61
59
57
59
26
10
—
2024
£233,200
£61,141
£11,464
Statement of Directors’ shareholding and share interests
Shareholding and other interests at 31 October 2023 (audited)
Directors’ share interests are set out below. As per the new Remuneration Policy, in order that the Executive Directors’ interests are aligned with
those of shareholders, Executive Directors are encouraged to build up and maintain a personal shareholding equal to 600% and 450% of salary
for the CEO and CFO/other Directors respectively. The shareholding guidelines take account of beneficially owned shares, restricted shares from
bonus deferral and vested but unexercised awards at their net of tax value. The Executive Directors had five years from the approval of this Policy
(12 July 2023) to achieve this guideline. As shown in the table below, both Executive Directors meet the in-employment guidelines under the Policy.
A shareholding guideline will continue to apply for two years post-cessation of employment. Executive Directors must retain shares equivalent
in value to 350% of salary for two years post-cessation of employment (or their actual shareholding on cessation if lower than 350% of salary).
This excludes shares owned pre-18 March 2020 and awards vesting from the 2017 LTIP.
As at 31 October 2023
Director
F Vecchioli
A Jones
D Hearn
I S Krieger
G van de Weerdhof
L Duhot
D Mousseau
J Bentall
A Darzins
Number of
beneficially
owned
shares 1
3,293,754
1,301,726
15,000
88,587
9,081
1,711
1,460
9,300
Nil
% of
salary
held 2
4,672
2,592
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Shareholding
requirement
(% of salary)
Shareholding
requirement met
600
450
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Yes
Yes
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Total interests
subject to
conditions
(LTIP nil-cost
awards)
449,276
264,357
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Outstanding
Sharesave
awards
Total
interests at
31 October 2023
2,008
2,008
3,745,038
1,568,091
n/a
n/a
n/a
n/a
n/a
n/a
n/a
15,000
88,587
9,081
1,711
1,460
9,300
Nil
Notes:
1 Beneficial interests include shares held directly or indirectly by connected persons and deferred bonus restricted shares acquired on 4 February 2022 and 30 January 2023.
2 Based on the 31 October 2023 share price of 683.5 pence per share and beneficially owned shares only.
Between 31 October 2023 and 15 January 2024 (being the latest practicable date prior to the publication of this report), there were no other
changes to the Directors’ interests.
2020 LTIP awards – awards exercised on 24 March 2023
The Executive Directors exercised their 2020 LTIP vested nil-cost options on 24 March 2023 as set out in the table below:
Director
F Vecchioli
A Jones
Number
of nil-cost
options
granted
123,489
87,986
Role
CEO
CFO
Dividend
equivalents
Total number of
shares exercised
Retained shares
9,658
6,881
133,147
94,867
69,468
49,427
The retained shares are included within the column ‘number of beneficially owned shares’ in the Directors’ shareholding table above.
Safestore Holdings plc | Annual report and financial statements 2023
119
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ remuneration report continued
for the year ended 31 October 2023
Part C: Annual report on remuneration continued
Outstanding LTIP awards at 31 October 2023
The following LTIP awards remain outstanding and unvested at 31 October 2023:
Director
F Vecchioli
A Jones
Awards granted
Maximum award
Awards vested
Awards lapsed
28/01/2021 LTIP
25/01/2022 LTIP
12/07/2023 LTIP
28/01/2021 LTIP
25/01/2022 LTIP
12/07/2023 LTIP
101,465
71,645
276,166
72,294
51,047
141,016
—
—
—
—
—
—
—
—
—
—
—
—
Note:
1 Figures shown exclude dividend equivalents.
Maximum
outstanding
awards1 at
31 October
2023
101,465
71,645
276,166
72,294
51,047
141,016
Market
price at
date of
vesting (p)
Normal
vesting date
— 28/01/2024
— 25/01/2025
— 12/07/2026
— 28/01/2024
— 25/01/2025
— 12/07/2026
The 2021, 2022 and 2023 LTIP awards are subject to performance measures and a continued service condition over a three-year period. The
performance measures and targets for the 2021 LTIP awards are set out on page 100 of the 2021 Annual Report; for the 2022 LTIP awards, these
are set out on pages 111 and 112 of the 2022 Annual Report; and for the 2023 LTIP awards, these are set out on pages 116 and 117 of this report.
Consideration of shareholder views
Please see page 108 for details.
Consideration of conditions elsewhere in the Group
Please see page 108 for details.
Considerations by the Committee of matters relating to Directors’ remuneration for 2023
The Committee is responsible for recommending to the Board the Remuneration Policy for Executive Directors and senior management and for
setting the remuneration packages for each Executive Director. The Committee also has oversight of the Remuneration Policy for all colleagues.
The written terms of reference of the Committee are available on the Company’s website and from the Company on request.
Members of the Committee in the year to 31 October 2022
L Duhot (Chair)
D Hearn
I S Krieger
G van de Weerdhof
D Mousseau
J Bentall
A Darzins1
Independent
Meetings held
during tenure
during the year
Number of
meetings
attended
Yes
Yes
Yes
Yes
Yes
Yes
Yes
8
8
8
8
8
8
1
8
8
8
8
8
8
1
Note:
1 A Darzins was appointed as an independent Non-Executive Director on 1 September 2023.
Please see page 93 of the Chair’s statement for the activities undertaken by the Committee during the year ended 31 October 2023.
None of the Committee members have any personal financial interest (other than as shareholders) in the decisions made by the Committee,
conflicts of interest arising from cross-directorships or day-to-day involvement in running the business.
The Chief Executive Officer, the Chief Financial Officer, the HR Director and the Company Secretary may attend meetings at the invitation of
the Committee but are not present when their own remuneration outcomes are being discussed. The HR Director acts as the secretary to
the Committee.
120
Safestore Holdings plc | Annual report and financial statements 2023
The Committee received external advice in 2023 from PricewaterhouseCoopers LLP (“PwC”) in connection with remuneration matters, including
the provision of general guidance on market and best practice. PwC was appointed by the Committee after a competitive tender process in August
2016. PwC is considered by the Committee to be objective and independent. PwC is a member of the Remuneration Consultants Group and, as
such, voluntarily operates under the code of conduct in relation to executive remuneration consulting in the UK. PwC also provided the Company
with reward, tax, and consulting advice. The Committee reviewed the nature of all the services provided during the year by PwC and was satisfied
that no conflict of interest exists or existed in the provision of these services and therefore the advice provided was objective and independent.
The total fees paid to PwC in respect of services to the Committee during the year were £167,000. Fees were determined based on the scope
and nature of the projects undertaken for the Committee.
Executive Director service contracts
The service agreements of the Executive Directors are not fixed term and are terminable by either the Company or the Director on the
following basis:
Director
F Vecchioli
A Jones
Date of current service contract
3 September 2013
29 January 2013
Notice period
Twelve months
Twelve months
Non-Executive Director letters of appointment
The Non-Executive Directors were appointed for an initial three-year term and their appointment continues, subject to annual re-election at the
Company’s AGM up to a maximum term of 9 years.
The table below sets out the dates that each Non-Executive Director was first appointed and the notice period by which their appointment may
be terminated early by either party:
Director
D Hearn
I S Krieger1
G van de Weerdhof
L Duhot
D Mousseau
J Bentall
A Darzins2
Date of appointment
1 December 2019
3 October 2013
1 June 2020
1 November 2021
1 November 2021
18 May 2022
1 September 2023
Notice period by Company or Director
Three months
Three months
Three months
Three months
Three months
Three months
Three months
Notes:
1
I S Krieger is stepping down from the Board at the 2024 AGM and is therefore not seeking re-election as a Non-Executive Director.
2 A Darzins was appointed as an independent Non-Executive Director on 1 September 2023.
Safestore Holdings plc | Annual report and financial statements 2023
121
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ report
Safestore Holdings plc is a public limited liability company
incorporated under the laws of England and Wales with the registered
number 04726380. It has a premium listing on the London Stock
Exchange Main Market for listed securities (LON:SAFE) and is a
constituent member of the FTSE 250 Index. The Company is a real
estate investment trust (“REIT”). It is expected that the Company,
which has no branches, will continue to operate as the holding
company of the Group. The address of the registered office is Brittanic
House, Stirling Way, Borehamwood, Hertfordshire WD6 2BT.
The principal activity of the Group is to provide storage solutions and
related goods and services to commercial and domestic customers.
The principal activity of the Company is that of a holding company.
The Directors present their report and the audited consolidated
financial statements for the year ended 31 October 2023. References
to Safestore, “the Group”, “the Company”, “we” or “our” are to
Safestore Holdings plc, and its subsidiary companies where appropriate.
Disclosures incorporated by reference
The following disclosures required to be included in the Directors’
report have been incorporated by way of reference to other sections of
this report and should be read in conjunction with this report:
• corporate governance report on pages 82 to 86;
• strategy and relevant future developments – refer to pages 8 to 19
of the strategic report;
• section 172, including engagement with employees, suppliers,
customers and others – refer to pages 32 to 34 of the strategic report;
• financial risk management, policies and objectives of the Group, along
with any details of exposure to any liability and cash flow risk, are set
out on pages 35 to 40 and in note 20 to the financial statements;
• details of the Group’s going concern assessment and viability
statement on pages 42 and 138; and
• employee matters and carbon emission disclosures are set out
in the Sustainability report on pages 48 to 53 and pages 59 to
77 respectively.
Results for the year and dividends
The results for the year ended 31 October 2023 are set out in the
consolidated statement of comprehensive income on page 134 and
a review of the Group’s results is explained further on pages 1 to 31.
An interim dividend of 9.9 pence (FY2022: 9.40 pence) was paid on
10 August 2023, comprised of a Property Income Distribution (“PID”)
of 2.47 pence (FY2022: 2.35 pence) and a non-PID dividend of
7.43 pence (FY2022: 7.05 pence). The Directors recommend a final
dividend in respect of the year ended 31 October 2023 of 20.20 pence
per ordinary share (FY2022: 20.40 pence), of which the PID element
will be 15.15 pence (FY2022: 20.40 pence). If authorised at the 2024
AGM, the dividend will be paid on 9 April 2024 with the record date
of 8 March 2024.
PIDs are paid after the deduction of withholding tax at the basic rate
(currently 20%). However, certain categories of shareholder may be entitled
to receive payment of a gross PID if they are UK resident companies, UK
public bodies, UK pension funds and managers of ISAs, PEPs and child
trust funds. Information, together with the relevant forms which must be
completed and submitted to the Company’s Registrar, for shareholders
who are eligible to receive gross PIDs is available in the Investor Relations
section of the Company’s website at www.safestore.com. Non-PID
dividends are not subject to withholding tax.
Going concern and viability statement
After making enquiries, the Directors of Safestore are confident that,
on the basis of current financial projections and facilities available and
after considering sensitivities, and stress testing, the Group has sufficient
resources for its operational needs and to enable the Group to remain
in compliance with the financial covenants in its bank facilities for
the foreseeable future, a period of not less than twelve months.
122
Safestore Holdings plc | Annual report and financial statements 2023
The Directors have assessed Safestore’s viability over a three-year
period to 31 October 2026. This is based on modelling over a
three-year period, which gives greater certainty over the forecasting
assumptions used. The viability statement is set out on page 42.
Financial instruments
The financial risk management objectives and policies of the Group,
along with any details of exposure to any liability and cash flow risk, are
set out on pages 35 to 40, and in note 20 to the financial statements.
Disclosures required under Listing Rule 9.8.4R
For the purposes of LR 9.8.4R, the information required to be
disclosed by LR 9.8.4R can be found in the following locations within
the Annual Report:
(1) Amount of interest capitalised
(2) Publication of unaudited financial information
Page
26
n/a
(4) Details of long term incentive schemes
165 and 166
(5) Waiver of emoluments by a Director
(6) Waiver of future emoluments by a Director
(7) Non-pre-emptive issues of equity for cash
(8)
Item (7) in relation to major subsidiary undertakings
(9) Parent company participation in a placing by a
listed subsidiary
(10) Contracts of significance
(11) Provision of services by a controlling shareholder
(12) Shareholder waiver of dividends
(13) Shareholder waiver of future dividends
(14) Agreements with controlling shareholders
n/a
n/a
165
n/a
n/a
125
n/a
123
n/a
n/a
All the information referenced above is incorporated by reference into
the Directors’ report.
Management report
The strategic report and the Directors’ report collectively comprise the
“management report” for the purposes of the Financial Conduct
Authority’s Disclosure Guidance and Transparency Rules (DTR 4.1.5R).
Corporate governance statement
In compliance with the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules, the disclosures required by
DTR 7.2.6 are set out in this Directors’ report.
Post-balance sheet events
There were no reportable events after the balance sheet date.
Directors
The Directors of the Company who served during the year and to the
date of this report were as follows:
Jane Bentall
Avis Darzins
Laure Duhot
David Hearn
Andy Jones
Ian Krieger
Non-Executive Director
Non-Executive Director
(appointed 1 September 2023)
Non-Executive Director
Non-Executive Chairman
Chief Financial Officer
Senior Independent Director
Delphine Mousseau
Non-Executive Director
Frederic Vecchioli
Chief Executive Officer
Gert van de Weerdhof
Non-Executive Director
The skills and experience of the serving Directors are set out on
pages 80 and 81, and their interests in the ordinary share capital of
the Company, and details of options granted to Executive Directors
under the Group’s share schemes are set out in the Directors’
remuneration report on pages 115 to 120.
Appointment and removal of Directors
The Company’s rules governing the appointment and removal of
Directors are contained in its Articles of Association. Changes to the
Articles of Association are only permitted in accordance with legislation
and must be approved by a special resolution of shareholders. The
Company’s Articles of Association provide that a Director may be
appointed by an ordinary resolution of the shareholders or by the
existing Directors, either to fill a vacancy or as an additional Director.
Further information on the Company’s internal procedures for the
appointment of Directors is given in the corporate governance section
on pages 85 and 88.
A Director may be removed by the Company in certain circumstances
set out in the Articles of Association or by an ordinary resolution of the
Company’s shareholders.
Vacation of office
The office of a Director shall be vacated if (amongst other
circumstances) a Director: (i) resigns; (ii) has been appointed for a
fixed term and the term expires; (iii) ceases to be a Director by virtue of
the Companies Act, is removed from office pursuant to the Articles of
Association or becomes prohibited by law from being a Director; (iv)
becomes bankrupt or the subject of an interim receiving order or
compounds with creditors generally or applies to the court for an
interim order under Section 253 of the Insolvency Act 1986 (as
amended) in connection with a voluntary arrangement under that act
or any analogous event occurs in relation to the Director in another
jurisdiction; (v) has been suffering from mental or physical ill health and
may remain so for more than three months; (vi) both a Director and his
or her alternate Director (if any) are absent, without the permission of
the Board from meetings of the Board for six consecutive months and
the Board resolves that his or her office is vacated; or (vii) is removed
from office by notice addressed to the Director at their last-known
address and signed by all co-Directors.
Directors’ powers
The Board, which is responsible for the management of the business,
may exercise all the powers of the Company subject to the provisions
of relevant legislation, the Company’s Articles of Association and
directions given by special resolution of the Company. The powers of
the Directors set out in the Articles of Association include those in
relation to the issue and buyback of shares.
Annual re-election of Directors
The Company’s Articles of Association require that all Directors retire
by rotation each year. In accordance with the Company’s Articles of
Association and with the Code, all Directors will retire at the Annual
General Meeting (“AGM”) to be held on Wednesday 13 March 2024
and will offer themselves for re-election.
Directors’ indemnities
The Company maintains directors’ and officers’ liability insurance
which provides appropriate cover for legal action brought against its
Directors. The Company has also granted indemnities to each of its
Directors to the extent permitted by law. The Directors also have (and
during the year ended 31 October 2023 had) the benefit of the
qualifying third party indemnity provision contained in the Company’s
Articles of Association, which provides a limited indemnity in respect
of liabilities incurred as a Director or other officer of the Company.
Directors’ interests in contracts and conflicts
of interest
No member of the Board had a material interest in any contract of
significance with the Company, or any of its subsidiaries, at any time
during the year. Directors are required to notify the Company of any
conflict or potential conflict of interest.
The Company’s policy is that Directors notify the Chairman and the
Company Secretary of all new outside interests and actual or potential
conflicts of interest as and when they arise. The Board confirms that
no actual or potential conflicts have been identified or notified to the
Company during the year and, accordingly, the Board has not
authorised any conflicts of interest as permitted by the Company’s
Articles of Association.
Share capital
At 31 October 2023, the Company’s issued share capital comprised
218,039,419 ordinary shares of 1 pence each. The rights and obligations
attached to the Company’s ordinary shares are set out in its Articles
of Association and note 11 of the Company’s financial statements.
Details of movements in the share capital during the year are provided
in note 23 of the financial statements. The issued share capital has
been increased by 6,111,922 ordinary shares during the year by fully
paid issues as follows:
Date
Share scheme
2 November 2022
to 23 February 2023
9 November 2022
to 19 October 2023
Exercise of options under
the 2017 (five-year)
Sharesave scheme
Exercise of options under
the 2019 (three-year)
Sharesave scheme
29 December 2022
to 20 April 2023
Early exercise of options
under the 2020 (three-year)
Sharesave scheme
10 November 2022 to
27 September 2023
24 March 2023
Issue of new share to the
Trustee of the Safestore
Employee Benefit Trust to
satisfy share awards granted by
the Company under its 2017
Long Term Incentive Plan
Issue of new share to the Trustee
of the Safestore Employee
Benefit Trust to satisfy share
awards granted by the Company
under its 2020 Long Term
Incentive Plan
Number of
ordinary shares
of 1 pence
35,183
15,774
4,666
5,625,324
430,975
No person holds securities in the Company carrying special rights
with regard to control of the Company.
Own shares – Employee Benefit Trust
At 31 October 2023, the Employee Benefit Trust retains 64,363
ordinary shares (FY2022: 359,795) with a nominal value of £643.63
(FY2022: £3,598) to satisfy awards under the Group’s share scheme
arrangements. This represents less than 0.03% (FY2022: 0.17%) of
the total issued share capital of the Company. The Trustee of the
Employee Benefit Trust has elected not to receive dividends on its
retained ordinary shares.
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors’ report continued
Purchase of own shares
The Company was granted authority at the 2023 AGM to make market
purchases of its own ordinary shares. This authority will expire at the
conclusion of the 2024 AGM and a resolution will be proposed to
seek further authority. No ordinary shares were purchased under
this authority during the year or in the period from 1 November 2023
to 15 January 2024.
Restrictions on transfers of shares and/or
voting rights
The Company is not aware of any agreements between shareholders
that may result in restrictions on the transfer of securities and/or voting
rights and apart from the matters described below, there are no
restrictions on the transfer of the Company’s ordinary shares and/or
voting rights:
• Certain restrictions on transfers of shares may from time to time be
imposed by laws and regulations (such as the Market Abuse
Regulation). The Company’s Securities Dealing Code provides that
all Directors and employees are required to seek the Company’s
approval to deal in its shares.
• Some share-based employee incentive plans include restrictions on the
transfer of shares, while the shares are subject to the plan concerned.
• The Directors’ Remuneration Policy provides that annual bonus
awards in excess of 100% of salary be deferred into shares. The
annual bonus plan rules include restrictions on the transfer of such
shares, while the shares are subject to the plan concerned.
• The transferor of a share is deemed to remain the holder until the
transferee’s name is entered in the register of shareholders. The
Board can refuse to register any transfer of any share which is not a
fully paid share. The Company does not currently have any partly
paid shares.
• Unless the Directors determine otherwise, members are not entitled
to vote personally or by proxy at a shareholders’ meeting, or to
exercise any other member’s right in relation to shareholders’
meetings, in respect of any share for which any call or other sum
payable to the Company remains unpaid.
• Unless the Directors determine otherwise, no transfer of shares
shall be registered and members are not entitled to vote personally
or by proxy at a shareholders’ meeting, or to exercise any other
member’s right in relation to shareholders’ meetings if the member
fails to provide the Company with the required information
concerning interests in those shares within the prescribed period
after being served with a notice under Section 793 of the
Companies Act 2006.
• The shareholding guidelines set out in the Directors’ Remuneration
Policy provide that Executive Directors are expected to build up
their shareholding over a five-year period. Executive Directors would
be expected to retain any shares vesting (post-tax) under in-flight
awards until they have acquired the necessary shares to meet their
shareholding requirements.
Details of deadlines in respect of voting for the 2024 AGM are
contained in the Notice of Meeting that has been circulated to
shareholders and can be viewed on the Company’s website at
www.safestore.com.
Substantial shareholdings
The table below sets out the names of those persons who, insofar as the Company is aware, as at 9 November 2023 (being the nearest date of
the Company’s internal analysis to 31 October 2023), are interested directly or indirectly in 3% or more of the issued share capital of the Company.
Name of shareholder
BlackRock Inc (Combined)
The Capital Group Companies, Inc
abrdn plc (Combined)
The Vanguard Group, Inc (Combined)
Principal Financial Group (Combined)
Cohen and Steers (Combined)
State Street Global Advisors (Combined)
Number of
ordinary shares
Percentage of issued
share capital
20,818,518
13,301,733
12,089,357
11,219,006
10,257,696
9,937,862
7,360,404
9.55%
6.10%
5.54%
5.14%
4.70%
4.56%
3.38%
Information provided to the Company pursuant to Rule 5 of the Disclosure Guidance and Transparency Rules (“DTR”) is published on a
Regulatory Information Service and on the Company’s website.
During the current financial year and as at 31 October 2023, the Company received the following notifications in accordance with DTR 5
disclosing changes to voting interests in its issued share capital. The information provided includes the percentage of issued capital as at the
date of the notifications.
Name of shareholder
The Capital Group Companies, Inc
Aggregate of abrdn plc affiliated investment
management entities with delegated voting
rights on behalf of multiple managed portfolios
Date of
latest notification
25 September 2023
21 June 2023
Number of
ordinary shares
10,926,792
Not advised
Percentage of
issued share capital
Nature of holding
(direct/indirect)
5.01%
Below 5.00%
Indirect
Indirect
Cohen and Steers, Inc
2 May 2023
10,685,793
4.90%
Indirect
Between 1 November 2023 and 15 January 2024, being a date not more than one month prior to the date of the Company’s Notice of Annual
General Meeting 2023, the Company did not receive any notification(s) in accordance with DTR 5 disclosing changes to voting interests in its
issued share capital.
All interests disclosed to the Company in accordance with DTR 5 that have occurred since 15 January 2024 can be found on the Company’s
website www.safestore.com.
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Safestore Holdings plc | Annual report and financial statements 2023
Significant agreements and change of control
The Group’s bank facilities agreement and US Private Placement Note agreements contain provisions entitling the counterparty to terminate the
contractual agreements in the event of a change of control of the Group. The rules governing the Group’s share scheme arrangements also
contain provisions relating to the vesting and exercising of options in the event of a change of control of the Group.
There are no agreements between the Company and its Directors or employees providing for compensation for loss of office or employment
(whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid.
Employment and environmental matters
Information in respect of the Group’s employment and environmental policies, including the policies regarding the employment of disabled
persons and greenhouse gas reporting, is summarised in the sustainability section on pages 44 to 77.
Amendment of the Articles of Association
The Company’s Articles of Association may only be amended by special resolution at a general meeting of the shareholders.
Political donations
The Company made no political donations and incurred no political expenditure during the year (FY2022: £nil). It remains the Company’s policy
not to make political donations or to incur political expenditure; however, the application of the relevant provisions of the Companies Act is
potentially very broad in nature and, as with last year, the Board is seeking shareholder authority to ensure that the Company does not
inadvertently breach these provisions as a result of the breadth of its business activities. It is not the policy of the Company or its subsidiaries
to make political donations.
Disclosure of information to auditor
Each of the persons who is a Director at the date of approval of this report confirms that:
• so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
• each Director has taken all the steps a Director might reasonably ought to have taken in order to make themself aware of any relevant audit
information and to establish that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
Independent auditor
The Audit Committee undertook their annual review of the Auditor’s independence. The Directors determined that Deloitte LLP remained
independent through the course of the year.
The Company began a formal Audit Tender at the end of 2023 for Audit Services, starting with the financial year ending 31 October 2024.
At the time of signing of this report, the outcome of the Audit Tender had not been determined. The Audit Committee will make a recommendation
to the Board on the outcome of the Tender before the publication of the Notice of Meeting for the Company’s Annual General Meeting on
Wednesday, 13 March 2024 and the appointment/re-appointment of the Company’s Auditor will be put to shareholder vote at the Annual
General Meeting.
Annual General Meeting (“AGM”)
The AGM will be held at the Company’s registered office at Brittanic House, Stirling Way, Borehamwood, Hertfordshire WD6 2BT, on Wednesday,
13 March 2024 at 12.00 noon.
The 2024 AGM will include, as special business, resolutions dealing with authority to issue shares, disapplication of pre-emption rights, authority
to purchase the Company’s own shares, authority to call a general meeting on not less than 14 days’ notice, and Deed of Release The Notice of
AGM sets out details of the business to be considered at the AGM and contains explanatory notes on such business. This has been dispatched
to shareholders and can be found on the Company’s website at www.safestore.com.
Shareholders are encouraged to use their vote at this year’s AGM by casting their votes online by using our electronic proxy appointment service
offered by the Company’s Registrar, Link Group, at www.signalshares.com or via the Link Group shareholder app, LinkVote+.
This report was approved by the Board for release on 16 January 2024 and signed on its behalf by:
David Orr
Company Secretary
16 January 2024
Safestore Holdings plc | Annual report and financial statements 2023
125
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Statement of Directors’ responsibilities
Responsibility statement
The Directors consider that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Each of the Directors, whose names and functions are listed in
Board of Directors on pages 80 and 81 confirm that, to the best
of their knowledge:
• the consolidated financial statements, which have been prepared in
accordance with UK-adopted International Accounting Standards,
give a true and fair view of the assets, liabilities, financial position
and profit of the Group;
• the Company’s financial statements, which have been prepared
in accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets,
liabilities and financial position of the Company; and
• the Strategic Report of this report includes a fair review of the
development and performance of the business and the position
of the Company and the wider Group, together with a description
of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’ report
is approved:
• so far as the Director is aware, there is no relevant audit information
of which the Company’s external auditor is unaware; and
• the Director has taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant audit
information and to establish that the Company’s external auditor is
aware of that information.
This responsibility statement was approved by the Board of Directors
on 16 January 2024 and is signed on its behalf by:
Frederic Vecchioli
Chief Executive Officer
Andy Jones
Chief Financial Officer
The Directors are responsible for preparing the Annual Report and the
Group and parent company financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare such financial
statements for each financial year. Under that law the Directors are
required to prepare the Group financial statements in accordance
with United Kingdom-adopted International Accounting Standards.
The financial statements also comply with International Financial
Reporting Standards (“IFRS”) as issued by the IASB. The Directors
have chosen to prepare the parent company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law),
including Financial Reporting Standard 101 “Reduced Disclosure
Framework”. Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and the parent company
and of the profit or loss of the Group for that period.
In preparing the parent company financial statements, the Directors
are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted International Accounting
Standards have been followed for the Group financial statements
and United Kingdom Accounting Standards, comprising FRS 101,
have been followed for the Company financial statements,
subject to any material departures disclosed and explained in
the financial statements;
• make judgements and accounting estimates that are reasonable
and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue
in business.
In preparing the Group financial statements, International Accounting
Standard 1 requires that Directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the specific
requirements of the financial reporting framework is insufficient to
enable users to understand the impact of particular transactions,
other events and conditions on the entity’s financial position and
financial performance; and
• make an assessment of the Group’s ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s transactions and
disclose with reasonable accuracy at any time the financial position of
the parent company and the Group to enable them to ensure that the
financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the parent company
and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group’s website at
www.safestore.com. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
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Safestore Holdings plc | Annual report and financial statements 2023
Financial statements
Independent auditor’s report
to the members of Safestore Holdings plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of Safestore Holdings plc (the “parent company”) and its subsidiaries (the “Group”) give a true and fair view of the state
of the Group’s and of the parent company’s affairs as at 31 October 2023 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom – adopted International Accounting Standards;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and parent company balance sheets;
• the consolidated and parent company statements of changes in equity;
• the consolidated cash flow statement; and
• the Group related notes 1 to 31 and parent company related notes 1 to 13.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law, and United
Kingdom – adopted International Accounting Standards. The financial reporting framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”
(United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting Council’s (“FRC’s”) Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the Group and
parent company for the year are disclosed in notes 7 and 4 respectively to the financial statements. We confirm that we have not provided any
non-audit services prohibited by the FRC’s Ethical Standard to the Group or the parent company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matter that we identified in the current year was the valuation of the investment properties,
which is consistent with the key audit matter identified in the prior year.
Within this report, the key audit matter is identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
Scoping
The materiality that we used for the Group financial statements was £38.5 million which was determined on the basis
of 2% of net assets. For testing of items affecting adjusted EPRA earnings we have applied a lower threshold amounting
to £5.0 million, which was determined as 5% of adjusted EPRA earnings.
We have identified four components within the Group: United Kingdom (“UK”), France, Spain and Benelux. The Group
engagement team (“GET”) has performed a full scope audit of the UK component and a French component audit team has
performed a full scope audit of the French component. In addition, the GET has performed specified procedures in respect
of the Spanish and Benelux components.
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127
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Independent auditor’s report continued
to the members of Safestore Holdings plc
Report on the audit of the financial statements continued
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern basis
of accounting included:
• obtaining an understanding of the relevant controls relating to the going concern process;
• an assessment of the Group’s financing facilities including nature of facilities, repayment terms and covenants;
• testing the mathematical accuracy of, and assessing the sophistication of, the model used to prepare the going concern forecast;
• challenging the range of scenarios, including the base case, modelled by management through our understanding of sector performance and
sentiment and historical forecasting accuracy of management;
• an assessment of the level of headroom arising in each scenario;
• an assessment of the outcome of the reverse stress testing performed by management; and
• an evaluation of the appropriateness of the going concern disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and parent company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit and directing the
efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
5.1. Valuation of investment properties
Key audit matter
description
Investment properties are held at a fair value of £2,890.9 million at 31 October 2023 (2022: £2,647.4 million).
This is the most quantitatively material balance in the financial statements.
Property valuation, which is performed by an external valuer, is by its nature subjective with significant estimation
being applied. We consider the key assumptions to comprise stabilised occupancy, capitalisation rate, discount
rate and net rental growth. These assumptions drive a cash flow model that is used as the basis of the valuation
of each individual property. Additionally, there are specific judgements pertaining to ‘immature’ stores which were
defined as: stores open for five years or less alongside occupancy under 80% and UK assets under leasehold with
an unexpired lease term of ten years or less.
For key sources of estimation uncertainty disclosures and further details of the Group’s valuation method and
assumptions, refer to note 2 and 13 of the financial statements. The valuation of investment properties is also
discussed in the Audit Committee report on page 91.
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Safestore Holdings plc | Annual report and financial statements 2023
Report on the audit of the financial statements continued
5. Key audit matters continued
5.1. Valuation of investment properties
continued
How the scope of our audit
responded to the key audit
matter
We carried out the following audit procedures in response to the identified key audit matter:
Understanding the properties and relevant controls:
• We gained an understanding of and tested the key controls relevant to the property valuation process.
• We met with management to enhance our understanding of the portfolio.
Data provided to the valuer:
• We obtained the source data provided by management to the valuer (e.g. historical revenue, occupancy,
average rental rates and lettable area on a store by store basis) and tested a sample of the source data for
completeness and accuracy.
External valuation:
• We assessed the appropriateness of the valuer’s scope and evaluated the competence, objectivity and
capability of the valuer.
• We identified individual properties through analysis against the following criteria:
• ‘immature’ stores, defined as stores open for five years or less alongside occupancy under 80%;
• UK leasehold stores with a term of ten years or less; and
• properties which display characteristics of audit interest through analysis of key assumptions, namely
stabilised occupancy, capitalisation rate, discount rate and net rent growth.
• We investigated the properties identified and challenged the key estimates by assessing the appropriateness
through comparison with the market and our expectation.
• We met with the valuers and with the involvement of our internal real estate specialists (who are members of
the Royal Institution of Chartered Surveyors), we performed an independent assessment of the assumptions
that underpin the valuations, based on our internal real estate specialists’ knowledge of the self storage
industry and wider real estate market.
• We evaluated whether the Group’s valuation methodology remains appropriate and assessed whether
indicative rents and yields achieved in recent comparable transactions were consistent with the assumptions
used in the Group’s valuations.
• We have also challenged the valuer and management around the impact of climate change on the portfolio
valuation, if any.
• We tested the accuracy and integrity of key elements of the valuer’s model. We also recalculated the valuation
for a sample of property assets, obtained contradictory evidence where available and performed a ‘stand-back’
review to assess the sufficiency of audit evidence.
• We reconciled the external valuation reports to underlying financial records to test for completeness and
accuracy within the Group’s financial statements.
Disclosures
• We assessed the sufficiency of the Group’s valuation disclosures, including the related sensitivities.
Key observations
We consider the assumptions applied in arriving at the fair value of the Group’s investment property to be
reasonable. The sensitivity disclosures are considered appropriate given the level of estimation involved and the
valuations are suitable for inclusion in the financial statements at 31 October 2023.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of
a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and
in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Materiality
£38.5 million (2022: £32.1 million).
£7.3 million (2022: £6.2 million).
Basis for determining
materiality
Rationale for the benchmark
applied
2% of net assets (2022: 2% of net assets).
3% of net assets (2022: 3% of net assets).
We considered net assets to be a critical financial
performance measure for the Group on the basis that it
is a key metric used by management, investors, analysts
and lenders.
We considered net assets to be a critical financial
performance measure for the Company on the basis
that it is a key metric used by management, investors,
analysts and lenders.
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Independent auditor’s report continued
to the members of Safestore Holdings plc
Report on the audit of the financial statements continued
6. Our application of materiality continued
6.1. Materiality continued
In addition to net assets, we also consider profit before income tax, adjusted for investment property and derivative fair value movements,
to be a critical financial performance measure for the Group, which aligns closely with EPRA earnings. We applied a lower threshold of
£5.0 million (2022: £6.0 million) for testing of balances impacting that measure, which has been determined as 5% (2022: 5%) of profit
before income tax adjusted for investment property and derivative fair value movements.
Net assets:
£1,929.7m
Group materiality: £38.5m
Net assets
Group materiality
Component materiality
range: £6.7m to £21.6m
Audit Committee reporting
threshold: £1.9m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Group financial statements
Parent company financial statements
Performance materiality
70% (2022: 70%) of Group materiality
70% (2022: 70%) of parent company materiality
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered the following factors:
a.
the quality of the control environment and whether we were able to rely on controls;
b.
the low volume of uncorrected misstatements in the previous audit; and
c.
turnover of management or key accounting personnel.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.9 million (2022: £1.6 million),
as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee
on disclosure matters that we identified when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and assessing the
risks of material misstatement at the Group level.
We have determined that there are four components within the Group: United Kingdom, France, Spain and Benelux operations. The Group audit
team has performed a full scope audit of the UK component and a French component audit team has performed a full scope audit of the French
component. In addition, the Group audit team has performed specified procedures at Group level in respect of the Spanish and Benelux components.
Revenue
Full audit scope 94%
Specified audit
procedures
6%
Profit
before tax
Full audit scope 98%
Specified audit
procedures
2%
Total
assets
Full audit scope 99%
Specified audit
procedures
1%
7.2. Our consideration of the control environment
From our understanding of the Group and after assessing relevant controls, we tested and relied on controls in performing our audit of self
storage income.
In addition, we have obtained an understanding of the relevant controls such as those relating to the financial reporting cycle, and those
in relation to our key audit matter.
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Report on the audit of the financial statements continued
7. An overview of the scope of our audit continued
7.2. Our consideration of the control environment continued
The Group uses the following application systems for the recording and reporting of its financial statements:
• SpaceManager
• Access Dimensions
We involved IT specialists to assess the relevant controls over these systems. Working with our IT specialists, we identified and assessed relevant
risks arising from each relevant IT system. We obtained an understanding of the IT environment as part of these risk assessment procedures.
We further performed the following procedures:
• determined whether each general IT control, individually or in combination with other controls, was appropriately designed to address the risk;
• obtained sufficient evidence to assess the operating effectiveness of the controls across the full audit period; and
• performed additional procedures where required if there were exceptions to the operation of those controls, including relevant mitigating controls.
From our understanding of the group and after assessing relevant controls, we tested the relevant controls relating to self storage income,
however we do not take a controls reliance approach for any substantive testing. Additionally, we obtained an understanding of the relevant
controls such as those relating to the financial reporting cycle, and those in relation to our key audit matter.
7.3. Our consideration of climate-related risks
We have made enquiries of management to understand the processes in place to assess the potential impact of climate change on the business
and the financial statements. Management considers climate change to be a principal risk which particularly impacts the cost of retrofitting stores
to improve their sustainability credentials and comply with future regulations. These risks are consistent with those identified through our own risk
assessment process.
As part of our identification of key audit matters, we consider there to be a risk in relation to climate change as part of the valuation of investment
properties. There is a risk that the valuation does not include the relevant assumptions around climate change, principally capital expenditure
required to bring the stores up to a certain environmental standard, to the extent assumed by a third party when determining fair value.
We challenged the valuer and management as to the assumptions included, and considered their reasonableness with the assistance of our
internal real estate specialists. We have reviewed the disclosures in the principal risk section and note 2 of the Annual Report and consider that
management has appropriately disclosed the current risk that has been identified.
7.4. Working with other auditors
We instructed the French component auditor to perform the audit of the France component and supervised its work through regular
communication. As the Group team, we attended a site visit in Paris and met local management. We attended its local audit close meeting with
the local management team as well as evaluated the outputs of its work in person and challenged their conclusions as part of our component
oversight role.
Our component audit work was executed at levels of materiality applicable to each individual component which were lower than Group
materiality, ranging from £6.7 million to £21.6 million (2022: £5.6 million to £17.4 million). In addition, for the lower materiality threshold described
above, our component thresholds ranged from £0.9 million to £2.8 million (2022: £1.1 million to £3.4 million).
8. Other information
The other information comprises the information included in the Annual Report, other than the financial
statements and our auditor’s report thereon. The Directors are responsible for the other information contained
within the Annual Report.
We have nothing to report
in this regard.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit,
or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
9. Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors
either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Safestore Holdings plc | Annual report and financial statements 2023
131
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Independent auditor’s report continued
to the members of Safestore Holdings plc
Report on the audit of the financial statements continued
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable
of detecting irregularities, including fraud, is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration
policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
• results of our enquiries of management, internal audit, the Directors and the Audit Committee about their own identification and assessment
of the risks of irregularities, including those that are specific to the Group’s sector;
• any matters we identified having obtained and reviewed the Group’s documentation of its policies and procedures relating to:
• identifying, evaluating and complying with laws and regulations and whether it was aware of any instances of non-compliance;
• detecting and responding to the risks of fraud and whether it has knowledge of any actual, suspected or alleged fraud;
• the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
• the matters discussed among the audit engagement team including significant component audit teams and relevant internal specialists,
including tax, IT, climate and property valuation specialists regarding how and where fraud might occur in the financial statements and any
potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the
greatest potential for fraud in the assumptions used in the valuation of investment properties. In common with all audits under ISAs (UK), we are
also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws and
regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and
regulations we considered in this context included the UK Companies Act, Listing Rules and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance
with which may be fundamental to the Group’s ability to operate or to avoid a material penalty.
11.2. Audit response to risks identified
As a result of performing the above, we identified the valuation of the investment properties as a key audit matter related to the potential risk of
fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed
in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws
and regulations described as having a direct effect on the financial statements;
• enquiring of management, the Audit Committee and legal counsel concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with HMRC; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments;
assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal
specialists and significant component audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
132
Safestore Holdings plc | Annual report and financial statements 2023
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the Directors’ report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
• the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and the parent company and their environment obtained in the course of the audit,
we have not identified any material misstatements in the strategic report or the Directors’ report.
13. Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer term viability and that part of the corporate
governance statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• the Directors’ statement with regard to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 122;
• the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate
set out on page 42;
• the Directors’ statement on fair, balanced and understandable set out on page 126;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 35 to 40;
• the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on page 83; and
• the section describing the work of the Audit Committee set out on page 90.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report
in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
Directors’ remuneration have not been made or the part of the Directors’ remuneration report to be audited
is not in agreement with the accounting records and returns.
We have nothing to report
in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the shareholders on 12 October 2014 to audit the financial
statements for the year ended 31 October 2014 and subsequent financial periods. The period of total uninterrupted engagement including
previous renewals and re-appointments of the firm is ten years, covering the years ended 31 October 2014 to 31 October 2023.
15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an
auditor’s 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 and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (“FCA”) Disclosure Guidance and Transparency Rule (“DTR”) 4.1.14R, these financial statements
form part of the European Single Electronic Format (“ESEF”) prepared Annual Financial Report filed on the National Storage Mechanism of the
UK FCA in accordance with the ESEF Regulatory Technical Standard (“ESEF RTS”). This auditor’s report provides no assurance over whether the
Annual Financial Report has been prepared using the single electronic format specified in the ESEF RTS.
Stephen Craig FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
17 January 2024
Safestore Holdings plc | Annual report and financial statements 2023
133
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Consolidated income statement
for the year ended 31 October 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
Share of loss in associate
Underlying EBITDA
Exceptional items
Share-based payments
Depreciation and variable lease payments
Share of associate’s depreciation, interest and tax
Operating profit before gains on investment properties and other exceptional gains
Gain on investment properties
Other exceptional gains
Operating profit
Finance income
Finance expense
Profit before income tax
Income tax charge
Profit for the year
Earnings per share for profit attributable to the equity holders
– basic (pence)
– diluted (pence)
The financial results for both years relate to continuing operations.
Group
2023
£’m
224.2
(69.9)
154.3
(17.7)
—
142.2
—
(3.5)
(2.1)
—
136.6
93.8
—
230.4
0.8
(23.4)
207.8
(7.6)
200.2
92.2
91.8
2022
£’m
212.5
(63.0)
149.5
(27.1)
(0.3)
135.1
(0.1)
(11.2)
(1.3)
(0.4)
122.1
381.6
10.8
514.5
2.0
(17.7)
498.8
(35.9)
462.9
219.5
212.4
Notes
3, 4
12
5
13
5
4, 6
8
8
9
11
11
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.
The notes on pages 138 to 169 are an integral part of these consolidated financial statements.
Consolidated statement of comprehensive income
for the year ended 31 October 2023
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Currency translation differences
Net investment hedge
Other comprehensive income, net of tax
Total comprehensive income for the year
134
Safestore Holdings plc | Annual report and financial statements 2023
Group
2023
£’m
200.2
7.1
(2.9)
4.2
2022
£’m
462.9
8.0
(4.6)
3.4
204.4
466.3
Consolidated balance sheet
as at 31 October 2023
Assets
Non-current assets
Investment in associates
External valuation of investment properties, net of lease liabilities
Add-back of lease liabilities
Investment properties under construction
Total investment properties
Property, plant and equipment
Deferred tax assets
Current assets
Inventories
Derivative financial instruments
Trade and other receivables
Amounts due from associates
Cash and cash equivalents
Total assets
Current liabilities
Bank borrowings
Trade and other payables
Current income tax liabilities
Lease liabilities
Non-current liabilities
Bank borrowings
Deferred income tax liabilities
Lease liabilities
Provisions
Total liabilities
Net assets
Equity
Ordinary share capital
Share premium
Translation reserve
Retained earnings
Total equity
Group
2023
£’m
2022
£’m
Notes
12
13
14
22
20
16
16
17
19
18
21
19
22
21
27
23
4.1
2,681.1
101.2
108.6
2,890.9
5.2
6.6
1.8
2,457.8
95.1
94.5
2,647.4
3.4
0.8
2,906.8
2,653.4
0.4
—
32.7
0.1
16.9
50.1
0.3
1.7
31.2
—
20.9
54.1
2,956.9
2,707.5
(44.5)
(52.4)
(0.4)
(13.1)
(110.4)
(681.3)
(139.2)
(88.3)
(2.6)
(911.4)
(1,021.8)
(101.7)
(62.7)
(0.8)
(13.2)
(178.4)
(522.1)
(129.0)
(82.2)
(2.4)
(735.7)
(914.1)
1,935.1
1,793.4
2.2
62.0
12.7
1,858.2
1,935.1
2.1
61.8
8.5
1,721.0
1,793.4
These financial statements were authorised for issue by the Board of Directors on 16 January 2024 and signed on its behalf by:
A Jones
Chief Financial Officer
F Vecchioli
Chief Executive Officer
Company registration number: 04726380
Safestore Holdings plc | Annual report and financial statements 2023
135
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Consolidated statement of changes in shareholders’ equity
for the year ended 31 October 2023
Balance at 1 November 2021
Comprehensive income
Profit for the year
Other comprehensive income
Currency translation differences
Net investment hedge
Total other comprehensive income
Total comprehensive income
Transactions with owners
Dividends (note 10)
Increase in share capital
Employee share options
Transactions with owners
Balance at 1 November 2022
Comprehensive income
Profit for the year
Other comprehensive income
Currency translation differences
Net investment hedge
Total other comprehensive income
Total comprehensive income
Transactions with owners
Dividends (note 10)
Increase in share capital and share premium
Employee share options
Transactions with owners
Balance at 31 October 2023
Share
capital
£’m
2.1
Share
premium
£’m
61.3
Group
Translation
reserve
£’m
5.1
—
8.0
(4.6)
3.4
3.4
—
—
—
—
8.5
—
7.1
(2.9)
4.2
4.2
—
—
—
—
Retained
earnings
£’m
Total
£’m
1,306.4
1,374.9
462.9
462.9
—
—
—
8.0
(4.6)
3.4
462.9
466.3
(56.9)
—
8.6
(48.3)
(56.9)
0.5
8.6
(47.8)
1,721.0
1,793.4
200.2
200.2
—
—
—
7.1
(2.9)
4.2
200.2
204.4
(65.9)
—
2.9
(63.0)
(65.9)
0.3
2.9
(62.7)
—
—
—
—
—
—
0.5
—
0.5
61.8
—
—
—
—
—
—
0.2
—
0.2
—
—
—
—
—
—
—
—
—
2.1
—
—
—
—
—
—
0.1
—
0.1
2.2
62.0
12.7
1,858.2
1,935.1
The translation reserve balance of £12.7 million (FY2022: £8.5 million) comprises all foreign exchange differences arising from the translation of
the financial statements of foreign operations and the impact of the net investment hedge. The cumulative impact of the net investment hedge
included within this reserve is a net expense of £2.8 million (FY2022: £0.1 million).
136
Safestore Holdings plc | Annual report and financial statements 2023
Consolidated cash flow statement
for the year ended 31 October 2023
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired
Investment in associates
Expenditure on investment properties and development properties
Proceeds from disposal of investment properties
Proceeds from disposal of land
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Issue of share capital
Equity dividends paid
Proceeds from borrowings
Repayment of borrowings
Exceptional swap termination
Financial instruments income
Debt issuance costs
Principal payment of lease liabilities
Net cash inflow from financing activities
Net decrease in cash and cash equivalents
Exchange loss on cash and cash equivalents
Cash and cash equivalents at 1 November
Cash and cash equivalents at 31 October
Group
2023
£’m
128.4
—
(24.9)
(5.5)
98.0
—
(2.3)
(119.0)
—
—
(2.9)
—
2022
£’m
132.2
0.1
(16.9)
(5.6)
109.8
(111.5)
(0.8)
(95.2)
6.4
1.0
(1.0)
0.2
(124.2)
(200.9)
0.2
(65.9)
108.4
(7.1)
—
0.4
(4.9)
(8.8)
22.3
(3.9)
(0.1)
20.9
16.9
0.5
(56.9)
266.1
(134.0)
0.5
1.3
(0.1)
(8.4)
69.0
(22.1)
(0.2)
43.2
20.9
Notes
24
12
12
10
8
8
17, 25
Safestore Holdings plc | Annual report and financial statements 2023
137
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Notes to the financial statements
for the year ended 31 October 2023
1. General information
Safestore Holdings plc (the “Company”) and its subsidiaries (together, the “Group”) provide self storage facilities to customers throughout the UK,
Paris, Spain, the Netherlands, and Belgium. The Company is a public limited company, which is listed on the London Stock Exchange and
incorporated and domiciled in the UK, England and Wales. The Company operates as the ultimate parent company of the Group. The address
of its registered office is Brittanic House, Stirling Way, Borehamwood, Hertfordshire WD6 2BT.
2. Summary of significant accounting policies
The principal accounting policies of the Group are set out below. These policies have been consistently applied to each of the years presented,
unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in accordance with United Kingdom adopted International Financial Reporting
Standards (“IFRS”) and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations. They also comply with those parts
of the Companies Act 2006 applicable to companies reporting under IFRS.
The Group consolidated financial statements are presented in Sterling and are rounded to the nearest £0.1 million, unless otherwise stated.
They are prepared on a going concern basis under the historical cost convention as modified by the revaluation of investment properties and the
fair value of derivative financial instruments.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual
amounts may differ from those estimates.
Going concern
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 consolidated financial information.
In assessing the Group’s going concern position as at 31 October 2023, 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 three-year outlook approved by the Board. In the context of the current environment, four
plausible scenarios were applied to the plan, including a reverse stress test scenario. These were based on the potential financial impact of the
Group’s principal risks and uncertainties and the specific risks associated with the cost of living crisis and the conflict in Ukraine. These scenarios
are differentiated by the impact of demand and enquiry levels, average rate growth and the level of cost savings. A scenario was also performed
where we 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. In November 2022, the Group completed the refinancing of its Revolving Credit
Facilities (“RCF”) which were due to expire in June 2023. The previous £250 million and €70 million revolving credit facilities have been replaced with
a single multi-currency unsecured £400 million facility, with a four-year term with two one-year extension options (available headroom £197 million).
One tranche of Private Placement notes matures in 2024 and it has been assumed this will be renewed at market rates The impact of these
scenarios has been reviewed against the Group’s projected cash flow position and financial covenants over a three-year period. Should any of
these scenarios, which are differentiated by the impact of demand and enquiry levels, average rate growth and the level of cost savings, occur,
clear mitigating actions are available to ensure that the Group remains liquid and able to meet its liabilities as they fall due. The financial position
of the Group, including details of its financing and capital structure, is set out in the financial review section of this report. Further details of the
Group’s viability statement are set out on page 42.
Standards, amendments to standards and interpretations issued and applied
The following new or revised accounting standards or IFRIC interpretations are applicable for the first time in the year ended 31 October 2023:
• Amendments to IFRS 3 References to the Conceptual Framework in IFRS Standards
• Amendments to IAS 16 Property, Plant and Equipment – Proceeds before Intended Use
• Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract
• Annual Improvements to IFRS Standards 2018–2020 Cycle
The adoption of the standards and interpretations has not significantly impacted these financial statements and any changes to our accounting
policies as a result of their adoption have been reflected in this note.
New and revised IFRSs in issue but not yet effective
At the date of authorisation of these financial statements, a number of new standards and amendments to standards and interpretations have
been issued but are not yet effective for the current accounting period. The Directors do not expect these standards to have a material impact
on the financial statements of the Group or Company.
• IFRS 17 Insurance Contracts
• Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policy
• Amendments to IAS 8 Definition of Accounting Estimate
• Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction
• Amendments to IAS 1 Classification of Liabilities as Current or Non-current
• Amendments to IAS 28 and IFRS 10 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture
138
Safestore Holdings plc | Annual report and financial statements 2023
2. Summary of significant accounting policies continued
Basis of consolidation and business combinations
The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary undertakings made up to
31 October each year. Subsidiaries are entities controlled by the Company. Control is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date
of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those
used by the Group.
All intra-group transactions, balances and unrealised gains on transactions are eliminated on consolidation. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the assets transferred.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The consideration transferred for the
acquisition is measured as the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity
instruments issued by the Group. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the date of acquisition. Any excess of the cost of an acquisition over the fair value of the Group’s share of
net identifiable assets including intangible assets of the acquired entity at the date of acquisition is recognised as goodwill. Any discount received
is credited to the income statement in the year of acquisition as negative goodwill on acquisition of subsidiary. Costs attributable to an acquisition
are expensed in the consolidated income statement under the heading ‘administrative expenses’.
Investment in associates
An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through
participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting except
when classified as held for sale. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the
Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of
the Group’s interest in that associate (which includes any long term interests that, in substance, form part of the Group’s net investment in the
associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the
associate. Where necessary, adjustments are made to the financial statements of associates to bring the accounting policies used into line with
those used by the Group. Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of
the Group’s interest in the relevant associate. Losses may provide evidence of an impairment of the asset transferred, in which case appropriate
provision is made for impairment.
Segmental reporting
IFRS 8 “Operating Segments” (“IFRS 8”) requires operating segments to be identified based upon the Group’s internal reporting to the chief
operating decision maker (“CODM”) to make decisions about resources to be allocated to segments and to assess their performance. The
CODM is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Group has
determined that its CODM are the Executive Directors.
An operating segment is a component of an entity:
(a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating
to transactions with other components of the same entity);
(b) whose operating results are regularly reviewed by the entity’s CODM to make decisions about resources to be allocated to the segment
and assess its performance; and
(c) for which discrete financial information is available.
The Group’s net assets, revenue and profit before tax are attributable to one principal activity, the provision of self storage, in four geographical
reporting segments, the United Kingdom, Paris in France, Spain, and the Netherlands and Belgium in Benelux.
Segment results, assets and liabilities include items directly attributable to segments as well as those that can be allocated on a reasonable basis.
Revenue recognition
Revenue represents amounts derived from the provision of self storage services (rental space, customer goods insurance and consumables) which
fall within the Group’s activities provided in the normal course of business, net of discounts, VAT (where applicable) and other sales related taxes.
Rental income is recognised over the period for which the space is occupied by the customer on a time apportionment basis. No revenue is
recognised if there are significant uncertainties regarding recovery of the consideration due. Insurance income is recognised over the period for
which the space is occupied by the customer on a time apportionment basis.
The Group has put in place insurance arrangements whereby the Group purchases block policies from third party insurers that customers can
access, for which it pays annual premiums at the beginning of the insurance year. The Group allows customers to benefit from the policies and
charges a fee for the level of cover that the customer needs. The block policies purchased and the income earned from charging customers are
independent transactions. Although Safestore is involved in the initial handling of any customers’ insurance claims, these are passed on to the
third party insurance providers, who are responsible for all insurance payments. The Group is not exposed to insurance risk.
Safestore Holdings plc | Annual report and financial statements 2023
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OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 2. Summary of significant accounting policies continued
Revenue recognition continued
The Group bears the inventory risk and pricing risk associated with these contracts and as such the Group acts as principal in the provision
of the access to insurance services for its customers who elect to access that insurance, and therefore revenue from insurance premiums is
reported on a gross basis. The portion of insurance premiums receivable from customers on occupied space that relates to unexpired risks at
the balance sheet date is reported as unearned premium liability in other payables.
Income for the sale of assets and consumables is recognised when the significant risks and rewards have been transferred to the buyer. For
property sales this is generally at the point of completion. Where any aspect of consideration is conditional then the revenue associated with that
conditional item is deferred. Income earned on the sales of consumable items is recognised at the point of sale.
Income from insurance claims is recognised when it is virtually certain of being received.
Foreign currency translation
Functional and presentation currency
The individual financial statements for each company are measured using the currency of the primary economic environment in which it operates
(its functional currency). For the purposes of the consolidated financial statements, the results and financial position of the Group are expressed
in Sterling, which is the presentational currency of the Group.
Transactions and balances
Foreign currency transactions are translated into the functional currency at the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on
the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in the income statement for
the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly
in equity.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated into the Group’s presentational currency at
exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period.
Exchange differences arising are classified as equity and are recognised as a separate component of equity, within the translation reserve.
Such translation differences are recognised as income or expense in the period in which the operation is disposed of.
Borrowing costs
All borrowing costs are recognised in the consolidated income statement in the period in which they are incurred, unless the costs are incurred
as part of the development of a qualifying asset, when they will be capitalised. Commencement of capitalisation is the date when the Group
incurs expenditure for the qualifying asset, incurs borrowing costs and undertakes activities that are necessary to prepare the assets for their
intended use when it is probable that they will result in future economic benefits to the entity and the costs can be measured reliably. In the case
of suspension of activities during extended periods, the Group suspends capitalisation. The Group ceases capitalisation of borrowing costs
when substantially all of the activities necessary to prepare the asset for use are complete, typically when a store opens.
Investment properties and investment properties under construction
Investment properties are those properties owned by the Group that are held to earn rental income, or for capital growth, or both. Investment
properties and investment properties under construction are initially measured at cost, including related transaction and borrowing costs.
After initial recognition, investment properties and investment properties under construction are held at fair value based on a market valuation
by professionally qualified external valuers at each balance sheet date.
The fair value of investment properties and investment properties under construction reflects, among other things, rental income from current
leases and assumptions about rental income from future leases in light of current market conditions. The fair value also reflects, on a similar
basis, any cash outflows that could be expected in respect of the property. Some of these outflows are recognised as a liability, including lease
liabilities in respect of leasehold land and buildings classified as investment properties; others, including variable lease payments not based on
an index or rate, are not recognised in the balance sheet.
In accordance with IAS 40, investment property held as a leasehold is stated gross of the recognised lease liability. Leasehold properties are
classified as investment properties and included in the balance sheet at fair value. The obligation to the lessor for the leasehold is included in the
balance sheet at the present value of the minimum lease payments. The minimum lease payment valuation is re-measured at the point of lease
modification and the value of the Group’s right-of-use assets is adjusted accordingly over the lease term. Gains or losses arising on changes in
the fair values of investment properties and investment properties under construction at the balance sheet date are recognised in the income
statement in the period in which they arise.
Gains or losses on sale of investment properties are calculated as the difference between the consideration received and fair value estimated
at the previous balance sheet date.
If an investment property or part of an investment property becomes owner-occupied, it is reclassified as property, plant and equipment,
and its fair value at the date of reclassification becomes its cost for accounting purposes.
Property, plant and equipment
Property, plant and equipment not classified as investment properties or investment properties under construction are stated at historical cost
less accumulated depreciation and any accumulated impairment loss. Historical cost comprises the purchase price and costs directly incurred
in bringing the asset into use.
Assets’ residual values and useful lives are reviewed and, if appropriate, adjusted at each balance sheet date. If the carrying amount of an asset
is greater than the recoverable amount then the carrying amount is written down immediately to the recoverable amount.
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Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 2. Summary of significant accounting policies continued
Property, plant and equipment continued
Depreciation is charged so as to write off the cost of an asset less estimated residual value of each asset over its expected useful life using the
straight-line method. The principal rates are as follows:
Owner-occupied freehold buildings
2% per annum
Motor vehicles
20–25% per annum
Computer hardware and software
15–33% per annum
Fixtures, fittings, signs and partitioning
10–15% per annum
The gain or loss arising on the retirement or disposal of an asset is determined as the difference between the net sales proceeds and the
carrying amount of the asset and is recognised in the income statement on disposal.
Impairment of tangible assets (excluding investment property)
At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is deemed to be the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset
(or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
A reversal of an impairment loss is recognised as income immediately.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises all costs of purchase and other costs incurred in bringing the
inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the
estimated selling price less directly associated costs. Provision is made for slow-moving or obsolete stock, calculated on the basis of sales
trends observed in the year.
As at 31 October 2023 the Group held finished goods and goods held for resale of £0.4 million (FY2022: £0.3 million). The Group consumed
£1.1 million (FY2022: £0.7 million) of inventories during the year. Inventory write downs were £nil for the financial year ended 31 October 2023
(FY2022: £nil). Inventories of £nil (FY2022: £nil) are carried at fair value less costs to sell.
Leases
A right-of-use asset and corresponding lease liability are recognised at commencement of the lease. The lease liability is measured at
the present value of the lease payments, discounted at the rate implicit in the lease or, if that cannot be readily determined, at the lessee’s
incremental borrowing rate specific to the term, country, currency and start date of the lease. Lease payments include: fixed payments; variable
lease payments dependent on an index or rate, initially measured using the index or rate at commencement; the exercise price under a purchase
option if the Group is reasonably certain to exercise; penalties for early termination if the lease term reflects the Group exercising a break option;
and payments in an optional renewal period if the Group is reasonably certain to exercise an extension option or not exercise a break option.
The lease liability is subsequently measured at amortised cost using the effective interest rate method. It is re-measured at the point of lease
modification, with a corresponding adjustment to the right-of-use asset, when there is a change in future lease payments resulting from a rent
review, change in an index or rate such as inflation, or change in the Group’s assessment of whether it is reasonably certain to exercise a
purchase, extension or break option.
The corresponding asset is initially measured at cost, comprising: the initial lease liability; any lease payments already made less any lease
incentives received; initial direct costs; and any dilapidation or restoration costs. The Group has two categories of assets in respect of leases:
those in respect of leases related to its leasehold properties, classified as investment property, and an occupational lease for its Head Office in
France, classified as a right-of-use asset under IFRS 16. The right-of-use assets classified as investment property are subsequently measured at
fair value, gross of the lease liability. The right-of-use asset in respect of its occupational leases is classified as property, plant and equipment and
is subsequently depreciated over the length of the lease.
Leases of low value assets and short term leases of twelve months or less are expensed to the Group consolidated income statement.
Variable lease payments, being the difference between the rent review accruals that will become payable but not yet finalised and the minimum
lease payments of the lease liability on current actual rent paid, are charged as expenses in the years in which they are payable.
Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised
in accordance with the Group’s general policy on borrowing costs.
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141
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
2. Summary of significant accounting policies continued
Financial instruments
(a) Financial assets
Financial assets are classified as financial assets at fair value through profit or loss (“FVTPL”) or at amortised cost as appropriate.
The Group determines the classification of its assets at initial recognition.
Financial assets are de-recognised only when the contractual right to the cash flows from the financial asset expires or the Group transfers
substantially all risks and rewards of ownership.
A financial asset is measured at amortised cost if it meets both of the following conditions:
• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• its contractual terms give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All financial assets not classified as measured at amortised cost as described above are measured through FVTPL. This includes all derivative
financial assets.
Financial assets at FVTPL – these assets are subsequently measured at fair value. Net gains and losses, including any interest, are recognised
in profit or loss.
Financial assets at amortised cost – these assets are subsequently measured at amortised cost using the effective interest method.
The amortised cost is reduced by impairment losses (expected losses). Interest income, foreign exchange gains and losses and impairment
are recognised in profit or loss. Any gain or loss on de-recognition is recognised in profit or loss.
The Group has the following classes of financial assets:
• Trade and other receivables – trade receivables are initially recognised at transaction price. Other receivables are initially recognised at fair
value. Subsequently, these assets are measured at amortised cost using the effective interest method, less provision for expected credit losses.
• Cash and cash equivalents – cash and cash equivalents represent only liquid assets with original maturity of 90 days or less. Bank overdrafts
that cannot be offset against other cash balances are shown within borrowings in current liabilities on the balance sheet. Cash and cash
equivalents are also classified as amortised cost. They are subsequently measured at amortised cost. Cash and cash equivalents include
cash in hand, deposits at call with banks, and other short term, highly liquid investments with original maturities of three months or less.
(b) Impairment of financial assets
The Group applies the IFRS 9 simplified approach to measuring expected credit losses (“ECLs”) which uses a lifetime expected loss allowance
on trade receivables. The expected credit losses are estimated using a provisions matrix based upon the Group’s historical credit loss
experience and geographic business unit, adjusted for factors that are specific to the debtors, general economic conditions, and an assessment
of both the current and forecast direction of conditions at the reporting date, including time value of money where appropriate.
Loss allowances for other receivables are initially measured at an amount equal to twelve months’ ECLs and subsequently it is assessed whether
the credit risk has increased significantly since initial recognition. When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant
and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s
historical experience and informed credit assessment and including forward-looking information. If the credit risk increased significantly, the loss
allowance is then measured using the lifetime ECL. The Group considers a financial asset to be in default when the borrower is unlikely to pay its
credit obligations to the Group in full.
(c) Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for
trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and
losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost
using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on
de-recognition is also recognised in profit or loss.
The Group has the following classes of financial liabilities:
• Trade and other payables – trade and other payables are initially recognised at fair value. Subsequently, they are measured at amortised
cost using the effective interest rate method.
• Borrowings – interest-bearing bank loans and overdrafts are initially recognised at fair value, net of directly attributable transaction costs.
Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in
the income statement using the effective interest method and are included within the carrying amount of the instrument to the extent that they
are not settled in the period in which they arise. Where fees are payable in relation to raising debt the costs are disclosed in the cash flow
statement within financing activities.
Where existing borrowings are replaced by others from the same lenders on substantially different terms, or the terms of existing borrowings
are substantially modified, such an exchange or modification is treated as a de-recognition of the original borrowings and the recognition of
new borrowings, and the difference in the respective carrying amounts, including issuance costs, is recognised in the income statement.
Otherwise, issuance costs incurred on refinancing are offset against the carrying value of borrowings.
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Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 2. Summary of significant accounting policies continued
Financial instruments continued
(d) Derivative financial instruments
The Group uses derivative financial instruments such as interest rate swaps, cross-currency swaps, and foreign exchange swaps, to hedge risks
associated with fluctuations on borrowings and foreign operations transactions. Such derivatives are initially recognised and measured at fair
value on the date a derivative contract is entered into and subsequently re-measured at fair value at each reporting date. The gain or loss on
re-measurement is taken to finance expense in the income statement. Interest costs for the period relating to derivative financial instruments,
which economically hedge borrowings, are recognised within interest payable on bank loans and overdrafts. Other fair value movements on
derivative financial instruments are recognised within fair value movement of derivatives. Designation as part of an effective hedge relationship
occurs at inception of a hedge relationship. Currently, the Group does not have any cash flow hedges or fair value hedges.
The borrowings denominated in foreign currency are used to hedge net assets. The effective part of any gain or loss on borrowings that are
designated as a hedge of a net investment in a foreign operation is recognised in other comprehensive income and presented in the translation
reserve in equity and is subsequently recognised in the Group income statement as part of the profit or loss on disposal of the net investment.
The ineffective portion of the gain or loss is recognised immediately within trading profit in the Group income statement.
Taxation including deferred tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable
or deductible. The Group’s liability for current tax is calculated using tax rates for that period that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax is provided on items that may become taxable at a later date, on temporary differences between the balance sheet value and the
tax base value, on an undiscounted basis. Deferred tax liabilities are generally recognised for taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits will be available, against which deductible temporary differences can
be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates
substantively enacted at the balance sheet date that are expected to apply in the period when the liability is settled, or the asset is realised.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities.
Employee benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed
retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group’s obligations under the schemes are
equivalent to those arising in a defined contribution retirement benefit scheme.
Share capital
Ordinary shares are classified as equity.
Costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.
Share-based payments
Share-based incentives are provided to employees under the Group’s Long Term Incentive Plan and employee Sharesave schemes. The Group
recognises a compensation cost in respect of these schemes that is based on the fair value of the awards, measured using Black-Scholes or
Monte Carlo valuation methodologies. For equity-settled schemes, the fair value is determined at the date of grant and is not subsequently
re-measured unless the conditions on which the award was granted are modified. For cash-settled schemes, the fair value is determined at the
date of grant and is re-measured at each balance sheet date until the liability is settled. Generally, the compensation cost is recognised on a
straight-line basis over the vesting period. Adjustments are made to reflect expected and actual forfeitures during the vesting period due to the
failure to satisfy service conditions or non-market performance conditions.
Climate change
In preparing the financial statements, the Directors have considered the impact of climate change, particularly in the context of the climate
change risks identified in the sustainability section of the strategic report and the Group’s stated target of operational net zero carbon emissions
by 2035. These considerations did not have a material impact on the financial reporting judgements and estimates in the current year.
This reflects the conclusion that climate change will have a limited exposure and vulnerability on the Group’s investment property portfolio, the
carrying value of non-current assets and the estimates of future profitability used in our assessment of the recoverability of deferred tax assets.
Key sources of estimation uncertainty
The preparation of consolidated financial statements under IFRS requires the Directors to make judgements, estimates and assumptions that
may affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual outcomes may
therefore differ from these judgements, estimates and assumptions.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
Safestore Holdings plc | Annual report and financial statements 2023
143
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 2. Summary of significant accounting policies continued
Key sources of estimation uncertainty continued
The following key source of estimation uncertainty has significant risk of causing a material adjustment, within the next financial year, to the
carrying amounts of assets and liabilities within the consolidated financial statements:
Estimate of fair value of investment properties and investment properties under construction
The Group values its investment properties using a discounted cash flow methodology which is based on projections of net operating income.
Principal assumptions and management’s underlying estimation of the fair value of those relate to: stabilised occupancy levels; expected future
growth in storage rental income and operating costs; maintenance requirements; capitalisation rate; and discount rates. There are inter-relationships
between the valuation inputs and they are primarily determined by market conditions. The effect of an increase in more than one input could be to
magnify the impact on the valuation. However, the impact on the valuation could be offset by the inter-relationship of two inputs moving in opposite
directions, e.g. an increase in rent may be offset by a decrease in occupancy, resulting in minimal net impact on the valuation. For immature stores,
these underlying estimates hold a higher risk of uncertainty, due to the unproven nature of its cash flows. C&W have considered Safestore’s
commitment to operational net zero carbon emissions by 2035 and the impacts that this could have on each of the Group’s investment properties.
A more detailed explanation of the background, methodology and estimates made by management that are adopted in the valuation of the
investment properties, as well as detailed sensitivity analysis, is set out in note 13 to the financial statements.
Non-GAAP financial information/Alternative Performance Measures
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/Alternative
Performance 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/Alternative Performance 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 on page 20.
• Adjusted Diluted EPRA Earnings per Share 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 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 Earnings per Share can be found in note 11.
• EPRA’s Best Practices Recommendations guidelines for Net Asset Value (“NAV”) metrics are EPRA Net Tangible Assets (“NTA”), EPRA Net
Reinstatement Value (“NRV”) and EPRA Net Disposal Value (“NDV”). EPRA NTA is considered to be the most relevant measure for the Group’s
business which provides sustainable long term progressive returns and is now the primary measure of net assets. The basis of calculation,
including a reconciliation to reported net assets, is set out in note 15.
• Like-for-like figures are presented to aid in the comparability of the underlying business as they exclude the impact on results of purchased,
sold, opened or closed stores.
• Constant exchange rate (“CER”) figures are provided in order to present results on a more comparable basis, removing foreign
exchange movements.
3. Revenue
Analysis of the Group’s operating revenue can be found below:
Self storage income
Insurance income
Other non-storage income
Total revenue
2023
£’m
187.2
25.5
11.5
224.2
2022
£’m
178.0
23.9
10.6
212.5
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Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 4. Segmental analysis
The segmental information presented has been prepared in accordance with the requirements of IFRS 8. The Group’s revenue, profit before
income tax and net assets are attributable to one activity: the provision of self storage accommodation and related services. This is based on the
Group’s management and internal reporting structure.
Safestore is organised and managed in four operating segments, based on geographical areas, being the United Kingdom, Paris in France,
Spain, and the Netherlands and Belgium in Benelux.
The chief operating decision maker, being the Executive Directors, identified in accordance with the requirements of IFRS 8, assesses the
performance of the operating segments on the basis of Underlying EBITDA, which 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.
The operating profits and assets include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Spain
£’m
Benelux
£’m
Year ended 31 October 2023
Continuing operations
Revenue
Underlying EBITDA
Share-based payments
Variable lease payments and depreciation
Operating profit before gain on investment properties
and other exceptional gains
Gain/(loss) on investment properties
Operating profit
Net finance expense
Profit/(loss) before tax
Total assets
Year ended 31 October 2022
Continuing operations
Revenue
Share of loss in associates
Underlying EBITDA
Exceptional items
Share-based payments
Variable lease payments and depreciation
Share of associate’s depreciation, interest and tax
Operating profit before gain on investment properties
and other exceptional gains
Gain on investment properties
Other exceptional gains
Operating profit
Net finance (expense)/income
Profit before tax
Total assets
UK
£’m
166.5
106.2
(3.1)
(1.9)
101.2
70.9
172.1
(13.8)
158.3
Paris
£’m
43.9
30.5
(0.3)
(0.2)
30.0
16.3
46.3
(2.2)
44.1
2,298.2
606.6
UK
£’m
163.0
(0.3)
103.5
—
(10.2)
(1.2)
(0.4)
91.7
295.7
5.7
393.1
(14.4)
378.7
2,024.8
Paris
£’m
41.4
—
28.0
(0.1)
(1.0)
(0.1)
—
26.8
78.5
5.1
110.4
(1.6)
108.8
581.7
Group
£’m
224.2
142.2
(3.5)
(2.1)
136.6
93.8
230.4
(22.6)
207.8
2,956.9
Group
£’m
212.5
(0.3)
135.1
(0.1)
(11.2)
(1.3)
(0.4)
122.1
381.6
10.8
514.5
(15.7)
498.8
10.0
4.4
—
—
4.4
7.3
11.7
(5.5)
6.2
24.1
Benelux
£’m
5.1
—
2.1
—
—
—
—
2.1
6.1
—
8.2
0.4
8.6
3.8
1.1
(0.1)
—
1.0
(0.7)
0.3
(1.1)
(0.8)
28.0
Spain
£’m
3.0
—
1.5
—
—
—
—
1.5
1.3
—
2.8
(0.1)
2.7
28.2
72.8
2,707.5
Inter-segment transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third
parties. There is no material impact from inter-segment transactions on the Group’s results. The segmental results exclude intercompany transactions.
Safestore Holdings plc | Annual report and financial statements 2023
145
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 5. Exceptional items and other exceptional gains
Costs relating to corporate transactions and exceptional property taxation
Exceptional items
Valuation gain on associate buy-out
Gain on disposals of investment properties
Gain on disposal of land
Other exceptional gains
2023
£’m
—
—
2023
£’m
—
—
—
—
2022
£’m
(0.1)
(0.1)
2022
£’m
5.5
0.2
5.1
10.8
Exceptional items of £nil were incurred in the year (FY2022: £0.1 million relating to fees associated with the Group’s corporate restructuring).
In the prior year, the Group sold the Nanterre site to the Joint Venture partner of Nanterre FOCD 92 for a total price of €7.6 million excluding VAT
and including demolition cost reimbursement, where the settlement was done partially in cash of £1.0 million (€1.1 million excluding tax), and
partially in kind through the delivery of the new building at the end of the operation (estimated at €6.5 million). This resulted in a net gain on
disposal of £5.1 million (€5.9 million) included within other exceptional gains in 2022.
In addition, the Group acquired the remaining 80% equity of Safestore Storage Benelux B.V. from its previous Joint Venture partner for €53.6 million
(£45.3 million) and became a wholly owned subsidiary (note 12). The original 20% equity investment was effectively de-recognised and re-recognised
back at the fair value based on the revised equity value effective at the 30 March 2022 transaction. This resulted in a valuation gain on the associate
buy-out of £5.5 million included within other exceptional gains in 2022.
Finally, the Group sold its Birmingham Digbeth store to a third party for £6.5 million and incurred a 1% agent fee on the sale price. The carrying
value of this store included within investment properties prior to disposal was £6.2 million, resulting in a gain on disposal of investment properties
of £0.2 million included within other exceptional gains in 2022.
6. Operating profit
The following items have been charged/(credited) in arriving at operating profit:
Staff costs
Inventories: cost of inventories recognised as an expense (included in cost of sales)
Depreciation on property, plant and equipment
Gain on investment properties
Variable lease payments payable under lease liabilities
Notes
26
2
14
13
2023
£’m
30.0
1.1
1.3
(93.8)
0.8
2022
£’m
38.1
0.7
1.0
(381.6)
0.3
7. Fees paid to auditor
During the year, the Group (including its overseas subsidiaries) obtained the following services from the Company’s auditor at costs
detailed below:
Audit services
Fees payable to the Company’s auditor and its associates for the audit of the parent company and consolidated
financial statements
Fees payable to the Company’s auditor and its associates for the audit of the Company’s subsidiaries pursuant to
legislation
Total audit fees
Fees for other services
Total
2023
£’m
2022
£’m
0.4
—
0.4
0.1
0.5
0.2
0.2
0.4
0.1
0.5
146
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 8. Finance income and costs
Finance income
Other interest and similar income
Interest receivable from loan to associates
Financial instruments income
Underlying finance income
Net exchange gains
Exceptional finance income
Total finance income
Finance costs
Interest payable on bank loans and overdraft
Amortisation of debt issuance costs on bank loan
Underlying finance charges
Interest on lease liabilities
Fair value loss of derivatives
Net exchange losses
Total finance costs
Net finance costs
2023
£’m
0.1
—
0.4
0.5
0.3
—
0.8
(15.1)
(1.3)
(16.4)
(5.3)
(1.7)
—
(23.4)
(22.6)
2022
£’m
0.1
0.1
1.3
1.5
—
0.5
2.0
(11.9)
(0.5)
(12.4)
(5.0)
(0.3)
—
(17.7)
(15.7)
The total change in fair value of derivatives reported within net finance costs for the year is a £1.7 million net loss (FY2022: £0.3 million net loss).
Included within finance income is £0.4 million relating to swaps settled in June 2023. In the prior year (FY2022: £1.3 million) received on
settlement of two €8.0 million average rate contracts acquired in March 2020 and settled in April 2022 for £0.7 million and October 2022 for
£0.6 million respectively.
9. Income tax charge
Analysis of tax charge in the year:
Current tax:
– current year
– prior year
Deferred tax:
– current year
– prior year
Tax charge
Note
22
2023
£’m
5.1
—
5.1
5.3
(2.8)
2.5
7.6
2022
£’m
6.1
—
6.1
29.8
—
29.8
35.9
Safestore Holdings plc | Annual report and financial statements 2023
147
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
9. Income tax charge continued
Reconciliation of income tax charge
The tax for the period is lower (FY2022: lower) than the standard rate of corporation tax in the UK for the year ended 31 October 2023 of 22.5%
(FY2022: 19%). The differences are explained below:
Profit before tax
Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 22.5% (FY2022: 19%)
Effect of:
– permanent differences
– profits from the tax exempt business
– deferred tax arising on acquisition of overseas subsidiary
– difference from overseas tax rates
– potential deferred tax assets not recognised
– utilisation of unrecognised brought forward tax losses
– prior year adjustment
Tax charge
2023
£’m
207.8
46.8
(6.3)
(32.4)
—
0.9
1.4
—
(2.8)
7.6
2022
£’m
498.8
94.8
—
(71.5)
4.5
8.6
0.4
(0.9)
—
35.9
The Group is a UK real estate investment trust (“REIT”). As a result, the Group is exempt from UK corporation tax on the profits and gains from its
qualifying property rental business in the UK, providing 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 increased from 19% to 25% with effect from 1 April 2023. Accordingly, the Group’s results for this
accounting period are taxed at a blended effective rate of 22.5% (FY2022: 19%).
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
10. Dividends per share
The dividend paid in 2023 was £65.9 million (30.30 pence per share) (FY2022: £56.9 million (27.00 pence per share)). A final dividend in respect
of the year ended 31 October 2023 of 20.20 pence (FY2022: 20.40 pence) per share, amounting to a total final dividend of £44.1 million (FY2022:
£42.8 million), is to be proposed at the AGM on 13 March 2024. The ex-dividend date will be 7 March 2024 and the record date will be 8 March
2024 with an intended payment date of 9 April 2024. The final dividend has not been included as a liability at 31 October 2023.
The Property Income Distribution (“PID”) element of the final dividend is 15.15 pence (FY2022: 20.4 pence), making the PID payable for the year
17.62 pence (FY2022: 22.75 pence) per share.
11. Earnings per Share
Basic Earnings per Share (“EPS”) is calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year excluding ordinary shares held as treasury shares. Diluted EPS is calculated by adjusting the
weighted average number 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 performed 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.
Basic
Dilutive securities
Diluted
Year ended 31 October 2023
Year ended 31 October 2022
Earnings
£’m
200.2
—
200.2
Shares
million
217.2
0.9
218.1
Pence
per share
92.2
(0.4)
91.8
Earnings
£’m
462.9
—
462.9
Shares
million
210.9
7.0
217.9
Pence
per share
219.5
(7.1)
212.4
148
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023
11. Earnings per Share continued
Adjusted Earnings per Share
Explanations related to the adjusted earnings measures adopted by the Group are set out in note 2 under the heading, Non-GAAP financial
information/Alternative Performance Measures, on page 144. Adjusted EPS represents profit after tax adjusted for the valuation movement on
investment properties, exceptional items, change in fair value of derivatives, exchange gains/losses, unwinding of the discount on the CGS
receivable and the associated tax thereon. The Directors consider that these alternative measures provide useful information on the performance
of the Group.
EPRA earnings and Earnings per Share before non-recurring items, movements on revaluations of investment properties and changes in the fair
value of derivatives have been disclosed to give a clearer understanding of the Group’s underlying trading performance.
Basic
Adjustments:
Gain on investment properties
Exceptional items
Other exceptional gains
Exceptional finance income
Net exchange gain
Change in fair value of derivatives
Tax on adjustments
Adjusted
EPRA adjusted:
Fair value re-measurement of lease liabilities
add-back
Tax on lease liabilities add-back adjustment
Adjusted EPRA basic EPS
Share-based payments charge
Dilutive shares
Adjusted Diluted EPRA EPS1
Year ended 31 October 2023
Year ended 31 October 2022
Earnings
£’m
200.2
Shares
million
217.2
Pence
per share
92.2
Earnings
£’m
462.9
Shares
million
210.9
(43.2)
(381.6)
(93.8)
—
—
—
(0.3)
1.7
1.4
—
—
—
—
—
—
—
109.2
217.2
(8.8)
1.1
101.5
3.5
—
105.0
—
—
217.2
1.9
219.1
—
—
—
(0.1)
0.8
0.6
50.3
(4.1)
0.5
46.7
1.6
(0.4)
47.9
0.1
(10.8)
(0.5)
—
0.3
29.7
—
—
—
—
—
—
—
100.1
210.9
(8.3)
1.0
92.8
11.2
—
104.0
—
—
210.9
—
8.0
218.9
Pence
per share
219.5
(180.9)
—
(5.1)
(0.2)
—
0.1
14.1
47.5
(3.9)
0.5
44.1
5.3
(1.9)
47.5
Note:
1 Adjusted Diluted EPRA EPS is defined in note 2 under, Non-GAAP financial information/Alternative Performance Measures, on page 144.
Gain on investment properties includes the fair value re-measurement of lease liabilities add-back of £8.8 million (FY2022: £8.3 million) and the
related tax thereon of £1.1 million (FY2022: £1.0 million). As an industry standard measure, EPRA earnings is presented. EPRA earnings of
£101.5 million (FY2022: £92.8 million) and EPRA Earnings per Share of 46.7 pence (FY2022: 44.1 pence) are calculated after further adjusting
for these items.
EPRA adjusted income statement (non-statutory)
Revenue
Underlying operating expenses (excluding depreciation and variable lease payments)
Share of associate’s Underlying EBITDA
Underlying EBITDA before variable lease payments
Share-based payments charge
Depreciation and variable lease payments
Operating profit before fair value re-measurement lease liabilities add-back
Fair value re-measurement of lease liabilities add-back
Operating profit
Net financing costs
Share of associate’s finance charges
Profit before income tax
Income tax
Profit for the year (“Adjusted EPRA basic earnings”)
Adjusted EPRA basic EPS
Final dividend per share
2023
£’m
224.2
(82.0)
—
142.2
(3.5)
(2.1)
136.6
(8.8)
127.8
(21.2)
—
106.6
(5.1)
101.5
2022
£’m
212.5
(77.5)
0.1
135.1
(11.2)
(1.3)
122.6
(8.3)
114.3
(15.9)
(0.4)
98.0
(5.2)
92.8
46.7 pence
44.1 pence
Movement
%
5.5%
5.8%
(100%)
5.3%
(68.8%)
61.5%
11.4%
6.0%
11.8%
33.3%
(100%)
8.8%
(1.9)
9.4%
5.9%
20.20 pence
20.40 pence
(0.98%)
Safestore Holdings plc | Annual report and financial statements 2023
149
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
12. Investment in associates
PBC Les Groues SAS
CERF II German Storage Topco S.a.r.l.
2023
£’m
1.8
2.3
4.1
2022
£’m
1.8
—
1.8
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”) (formerly CERF Storage JV B.V.), a company registered
and operating in the Netherlands. SSB was accounted for using the equity method of accounting. SSB invests 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 €53.6 million (£45.3 million) and SSB became a wholly owned subsidiary. Under IFRS 3 this transaction, where properties
were acquired through the purchase of a corporate vehicle in the year, has been judged to meet the accounting definition of an asset purchase.
PBC Les Groues SAS
The Group has a 24.9% interest in PBC Les Groues SAS (“PBC”), a company registered and operating in France. PBC is accounted for using
the equity method of accounting. PBC is the parent company of Nanterre FOCD 92, a company also registered and operating in France, which
is developing a new store as part of a wider development programme located in Paris. The development project is managed by its joint venture
partners, therefore the Group has no operational liability during this phase. During the current period there has been no material investment in
the company (31 October 2022: £0.8m). The investment is considered immaterial relative to the Group’s underlying operations. The aggregate
carrying value of the Group’s interest in PBC was £1.8m (31 October 2022: £1.8m), made up of an investment of £1.8m (31 October 2022: £1.8m).
The Group’s share of profits from continuing operations for the period was £nil (30 October 2022: £nil). The Group’s share of total comprehensive
income of associates for the period was £nil (31 October 2022: £nil).
CERF II German Storage Topco S.a.r.l.
On 1 December 2022 the Group acquired a 10.0% interest in CERF II German Storage Topco S.a.r.l. (CERF II), a company registered in
Luxembourg for which the Group has board representation. The reporting date of the financial statements for the company is 31 December.
CERF II is accounted for using the equity method of accounting. Safestore entered the German Self Storage market via a new investment with
Carlyle which acquired the myStorage business. The aggregate carrying value of the Group’s interest in CERF II was £2.3m (31 October 2022: £nil),
made up of an investment of £2.3m (31 October 2022: £nil). The Group’s share of profits from continuing operations for the period was £nil
(31 October 2022: £nil). The Group’s share of total comprehensive income of associates for the period was £nil (31 October 2022: £nil).
13. Investment properties
At 1 November 2022
Additions
Disposals
Reclassifications
Revaluations
Fair value re-measurement of lease liabilities add-back
Exchange movements
At 31 October 2023
External valuation
of investment
properties, net of
lease liabilities
£’m
Add-back of
lease liabilities
£’m
Investment
property
under
construction
£’m
2,457.8
67.6
—
42.0
103.5
—
10.2
95.1
17.5
(3.1)
—
—
(8.8)
0.5
94.5
56.4
—
(42.0)
(0.9)
—
0.6
Total
investment
properties
£’m
2,647.4
141.5
(3.1)
—
102.6
(8.8)
11.3
2,681.1
101.2
108.6
2,890.9
The Group acquired the freehold of the Oldbury property on 22 February 2023 and Valencia property in January 2023. This resulted in the
disposal of lease liabilities with a carrying value of £2.2m and £0.9m respectively.
150
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 13. Investment properties continued
At 1 November 2021
Acquisition of subsidiaries
Additions
Disposals
Reclassifications
Revaluations
Fair value re-measurement of lease liabilities add-back
Exchange movements
At 31 October 2022
The gain on investment properties comprises:
Freehold stores
At 1 November 2022
Movement in year
At 31 October 2023
Leasehold stores
At 1 November 2022
Movement in year
At 31 October 2023
All stores
At 1 November 2022
Movement in year
At 31 October 2023
Revaluations of investment property and investment property under construction
Fair value re-measurement of lease liabilities add-back
External valuation
of investment
properties, net of
lease liabilities
£’m
Add-back of
lease liabilities
£’m
Investment
property
under
construction
£’m
1,881.8
128.2
31.8
(6.2)
16.5
394.1
—
11.6
2,457.8
82.1
0.6
20.2
—
—
—
(8.3)
0.5
95.1
67.4
—
47.4
—
(16.5)
(4.2)
—
0.4
94.5
Cost
£’m
Revaluation
on cost
£’m
892.7
126.1
1,018.8
133.7
5.5
139.2
1,026.4
131.6
1,158.0
1,142.4
75.7
1,218.1
289.0
16.0
305.0
1,431.4
91.7
1,523.1
2023
£’m
102.6
(8.8)
93.8
Total
investment
properties
£’m
2,031.3
128.8
99.4
(6.2)
—
389.9
(8.3)
12.5
2,647.4
Valuation
£’m
2,035.1
201.8
2,236.9
422.7
21.5
444.2
2,457.8
223.3
2,681.1
2022
£’m
389.9
(8.3)
381.6
The valuation of £2,681.1 million (FY2022: £2,457.8 million) excludes £0.6 million in respect of owner-occupied property, which is included within
property, plant and equipment. Rental income earned from investment properties for the year ended 31 October 2023 was £188.5 million
(FY2022: £179.3 million).
The Group has classified the 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 year.
As described in note 2, summary of significant accounting policies, where the valuation obtained for investment property is net of all payments
to be made, it is necessary to add back the lease liability to arrive at the carrying amount of investment property at fair value. The lease liability
of £101.4 million (FY2022: £95.4 million) per note 21 differs to the £101.2 million (FY2022: £95.1 million) disclosed above as a result of accounting
for the French Head Office lease under IFRS 16. This lease is included as part of property, plant and equipment, and has a net book value of
£0.2 million as at 31 October 2023 (FY2022: £0.3 million) (note 14).
All direct operating expenses arising from investment property that generated rental income as outlined in note 3 were £82.0 million
(FY2022: £75.3 million).
Safestore Holdings plc | Annual report and financial statements 2023
151
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 13. Investment properties continued
The freehold and leasehold investment properties have been valued as at 31 October 2023 by external valuer, Cushman & Wakefield Debenham
Tie Leung Limited (“C&W”). The valuation has been carried out in accordance with the current edition of the RICS Valuation – Global Standards,
which incorporates the International Valuation Standards and the RICS Valuation UK National Supplement (the “RICS Red Book”). The valuation
of each of the investment properties has been prepared on the basis of fair value as a fully equipped operational entity, having regard to trading
potential. Two non-trading properties were valued on the basis of fair value. The valuation has been provided for accounts purposes and, as
such, is a Regulated Purpose Valuation as defined in the RICS Red Book. In compliance with the disclosure requirements of the RICS 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 this valuation has done
so since April 2020. The valuations have been reviewed by an internal investment committee comprising two valuation partners and an
investment partner, all unconnected with the assignment;
• 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;
• in relation to the preceding financial year of C&W, the proportion of total fees payable by the Group to the total fee income of the firm is less
than 5%; and
• the fee payable to C&W is a fixed amount per property and is not contingent on the appraised value.
Valuation method and assumptions
The valuation of the operational self storage facilities has been prepared having regard to trading potential. Cash flow projections have been
prepared for all of the properties reflecting estimated absorption, revenue growth and expense inflation. A discounted cash flow method of
valuation based on these cash flow projections has been used by C&W to arrive at its opinion of fair value for these properties.
C&W has adopted different approaches for the valuation of the leasehold and freehold assets as follows:
Freehold and long leasehold (UK, Paris, Spain, the Netherlands, and Belgium)
The valuation is based on a discounted cash flow of the net operating income over a ten-year period and a notional sale of the asset at the end
of the tenth year.
Assumptions:
• Net operating income is based on projected revenue received less projected operating costs together with a central administration charge of
6% of the estimated annual revenue, subject to a cap and collar. The initial net operating income is calculated by estimating the net operating
income in the first twelve months following the valuation date.
• The net operating income in future years is calculated assuming either straight-line absorption from day one actual occupancy or variable
absorption over years one to four of the cash flow period, to an estimated stabilised/mature occupancy level. In the valuation the assumed
stabilised occupancy level for the trading stores (both freeholds and all leaseholds) open at 31 October 2023 averages 89.33% (FY2022: 89.18%).
The projected revenues and costs have been adjusted for estimated cost inflation and revenue growth. The average time assumed for stores
to trade at their maturity levels is 13.44 months (FY2022: 18.51 months).
• The capitalisation rates applied to existing and future net cash flows have been estimated by reference to underlying yields for industrial and
retail warehouse property, yields for other trading property types such as purpose-built student housing and hotels, bank base rates, ten-year
money rates, inflation and the available evidence of transactions in the sector. The valuation included in the accounts assumes rental growth
in future periods. If an assumption of no rental growth is applied to the external valuation, the net initial yield pre-administration expenses for
mature stores (i.e. excluding those stores categorised as ‘developing’) is 5.92% (FY2022: 6.08%), rising to a stabilised net yield pre-administration
expenses of 6.71% (FY2022: 6.74%).
• The weighted average freehold exit yield on UK freeholds is 5.75% (FY2022: 5.74%), on France freeholds is 5.61% (FY2022: 5.96%), on Spain
freeholds is 5.50% (FY2022: 5.50%), on the Netherlands freeholds is 5.15% (FY2022: 5.05%) and on Belgium freeholds is 5.00% (FY2022: 5.02%).
The weighted average freehold exit yield for all freeholds adopted is 5.72% (FY2022: 5.78%).
• 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
8.59% (FY2022: 8.40%), in the France portfolio is 8.38% (FY2022: 8.58%), in the Spain portfolio is 8.39% (FY2022: 8.29%), in the Netherlands
portfolio is 7.74% (FY2022: 7.49%) and in the Belgium portfolio is 7.99% (FY2022: 7.62%). The weighted average annual discount rate adopted
(for both freeholds and all leaseholds) is 8.54% (FY2022: 8.49%).
• Purchaser’s costs in the range of approximately 3.3% to 6.8% for the UK, 7.5% for Paris, 2.5% for Spain, 7.5% for the Netherlands and 7.5%
for Belgium 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), 4.5% (Spain), 7.5% (the Netherlands) and 7.5% (Belgium) are
assumed on the notional sales in the tenth year in relation to freehold and long leasehold stores.
152
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 13. Investment properties continued
Valuation method and assumptions continued
Short leaseholds (UK)
The same methodology has been used as for freeholds, except that no sale of the assets in the tenth year is assumed but the discounted
cash flow is extended to the expiry of the lease. The average unexpired term of the Group’s UK short term leasehold properties is 13.2 years
(FY2022: 13.0 years). The average unexpired term excludes the commercial leases in France and Spain.
Short leaseholds (Paris)
In relation to the commercial leases in Paris, C&W has valued the cash flow projections in perpetuity due to the security of tenure arrangements
in that market and the potential compensation arrangements in the event of the landlord wishing to take possession. The valuation treatment
is therefore the same as for the freehold properties. The capitalisation rates on these stores reflect the risk of the landlord terminating the
lease arrangements.
Short leaseholds (Spain)
In relation to the commercial leases in Spain, C&W has valued the cash flow projections in perpetuity due to the nature of the lease agreements
which allows the tenant to renew the lease year-on-year into perpetuity. The valuation treatment is therefore the same as for the freehold
properties. The capitalisation rates on these stores reflect the risk of the rolling lease arrangements.
In relation to one other short leasehold in Spain, the lease allows for a five-year automatic extension beyond the initial lease expiry date subject
to neither party serving notice stating it does not wish to do so. This allows the landlord to terminate the lease at the original expiry date if it so
wishes. The same methodology has been used as for freeholds, except that no sale of the asset in the tenth year is assumed but the discounted
cash flow is extended to the expiry of the lease.
Short leaseholds (the Netherlands)
The same methodology has been used as for freeholds, except that no sale of the assets in the tenth year is assumed but the discounted cash
flow is extended to the expiry of the lease.
Short leaseholds (Belgium)
There are no short term leaseholds in Belgium.
Investment properties under construction
C&W has valued the stores in development adopting the same methodology as set out above but on the basis of the cash flow projection
expected for the store at opening and allowing for the outstanding costs to take each store from its current state to completion and full fit out,
except several recently acquired stores which have been valued at acquisition costs. C&W has allowed for carry costs and construction
contingency, as appropriate.
Immature stores: value uncertainty
C&W has assessed the value of each property individually. Where the stores in the portfolio are relatively immature and have low initial cash flow.
C&W has endeavoured to reflect the nature of the cash flow profile for these properties in its valuation, and the higher associated risks relating to
the as yet unproven future cash flow, by adjustment to the capitalisation rates and discount rates adopted. However, immature low cash flow
stores of this nature are rarely, if ever, traded individually in the market, unless as part of a distressed sale or similar situation, although there is
more evidence of such stores being traded as part of a group or portfolio transaction.
C&W states that, in practice, if an actual sale of the properties was to be contemplated then any immature low cash flow stores would normally
be presented to the market for sale, lotted or grouped with other more mature assets owned by the same entity, in order to alleviate the issue of
negative or low short term cash flow. This approach would enhance the marketability of the group of assets and assist in achieving the best price
available in the market by diluting the cash flow risk.
C&W has not adjusted its opinion of fair value to reflect such a grouping of the immature assets with other properties in the portfolio and all stores
having been valued individually. However, C&W highlights the matter to alert the Group to the manner in which the properties might be grouped
or lotted in order to maximise their attractiveness to the marketplace.
C&W considers this approach to be a valuation assumption but not a special assumption, the latter being an assumption that assumes facts that
differ from the actual facts existing at the valuation date and which, if not adopted, could produce a material difference in value.
Valuation assumption for purchaser’s costs
The Group’s investment property assets have been valued for the purposes of the financial statements after adjusting for notional purchaser’s
costs in the range of approximately 3.3% to 6.8% (UK), 7.5% (Paris), 2.5% (Spain), 7.5% (the Netherlands) and 7.5% (Belgium), as if they were sold
directly as property assets. The valuation is an asset valuation which is strongly linked to the operating performance of the business. They would
have to be sold with the benefit of operational contracts, employment contracts and customer contracts, which would be difficult to achieve
except in a corporate structure.
This approach follows the logic of the valuation methodology in that the valuation is based on a capitalisation of the net operating income after
allowing a deduction for operational cost and an allowance for central administration costs. A sale in a corporate structure would result in a
reduction in the assumed stamp duty land tax but an increase in other transaction costs reflecting additional due diligence resulting in a reduced
notional purchaser’s cost of c. 2.75% of gross value. All the significant sized transactions that have been concluded in the UK in recent years
were completed in a corporate structure. The Group therefore instructed C&W to prepare additional valuation advice on the basis of purchaser’s
cost of 2.75% of gross value which is used for internal management purposes.
Safestore Holdings plc | Annual report and financial statements 2023
153
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 13. Investment properties continued
Valuation method and assumptions continued
Sensitivity of the valuation to assumptions
As noted in ‘Key sources of estimation uncertainty’ on page 143, self storage valuations are complex, derived from data which is not widely publicly
available and involves a degree of judgement. 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.
There are inter-relationships between the valuation inputs, and they are primarily determined by market conditions. The effect of an increase in more
than one input could be to magnify the impact on the valuation. However, the impact on the valuation could be offset by the inter-relationship of two
inputs moving in opposite directions, e.g. an increase in rent may be offset by a decrease in occupancy, resulting in no net impact on the valuation.
For these reasons we have classified the valuation of our property portfolio as Level 3 as defined by IFRS 13. Inputs to the valuation, some
of which are ‘unobservable’ as defined by IFRS 13, include capitalisation yields, stable occupancy rates, and time to stabilised occupancy. The
existence of an increase of more than one ‘unobservable’ input would augment the impact on the valuation. The impact on the valuation would be
mitigated by the inter-relationship between unobservable inputs moving in opposite directions. For example, an increase in stable occupancy may
be offset by an increase in 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 change in
capitalisation rates
£’m
Impact of a change in stabilised
occupancy assumption
£’m
Impact of a delay
in stabilised
occupancy
assumption
£’m
25 bps decrease
25 bps increase
1% increase
1% decrease
24-month delay
Reported group
129.1
88.1
53.5
(31.9)
(16.22)
14. Property, plant and equipment
Cost
At 1 November 2022
Additions
Disposals
At 31 October 2023
Accumulated depreciation
At 1 November 2022
Charge for the year
Disposals
At 31 October 2023
Net book value
At 31 October 2023
At 31 October 2022
Owner-
occupied
buildings
£’m
Motor
vehicles
£’m
Fixtures
and fittings
£’m
IFRS 16
leases
£’m
1.0
0.7
—
1.7
0.2
—
—
0.2
1.5
0.8
0.9
0.6
(0.1)
1.4
0.5
0.2
(0.1)
0.6
0.8
0.4
7.8
1.8
(0.1)
9.5
5.9
1.0
(0.1)
6.8
2.7
1.9
0.6
—
—
0.6
0.3
0.1
—
0.4
0.2
0.3
Total
£’m
10.3
3.1
(0.2)
13.2
6.9
1.3
(0.2)
8.0
5.2
3.4
As a result of adopting IFRS 16, the Group initially recognised a right-of-use asset of £0.4 million in property, plant and equipment and a lease
liability of £0.4 million at the transition date of 1 November 2019. Due to a lease extension for this asset, this has subsequently been re-measured
by an additional £0.2 million. The additional depreciation charge for the right-of-use asset recognised during the year was £0.1 million.
The reduction in the lease liability in respect of principal repayments and interest was £0.1 million.
154
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023
14. Property, plant and equipment continued
Cost
At 1 November 2021
Additions
Disposals
At 31 October 2022
Accumulated depreciation
At 1 November 2021
Charge for the year
Disposals
At 31 October 2022
Net book value
At 31 October 2022
At 31 October 2021
Owner-
occupied
buildings
£’m
Motor
vehicles
£’m
Fixtures
and fittings
£’m
IFRS 16
leases
£’m
0.8
0.2
—
1.0
0.2
—
—
0.2
0.8
0.6
1.0
0.2
(0.3)
0.9
0.5
0.1
(0.1)
0.5
0.4
0.5
7.0
0.8
—
7.8
5.1
0.8
—
5.9
1.9
1.9
0.4
0.2
—
0.6
0.2
0.1
—
0.3
0.3
0.2
Total
£’m
9.2
1.4
(0.3)
10.3
6.0
1.0
(0.1)
6.9
3.4
3.2
15. Net assets per share
EPRA’s Best Practices Recommendations guidelines for Net Asset Value (“NAV”) metrics are EPRA Net Tangible Assets (“NTA”), EPRA Net
Reinstatement Value (“NRV”) and EPRA Net Disposal Value (“NDV”).
EPRA NTA is considered to be the most relevant measure for the Group’s business which provides sustainable long term progressive returns and
is now the primary measure of net assets, replacing the previously reported EPRA NAV metric. EPRA NTA assumes that entities buy and sell
assets, thereby crystallising certain levels of unavoidable deferred tax. Due to the Group’s REIT status, deferred tax is only provided at each
balance sheet date on properties outside the REIT regime. As a result, deferred taxes are excluded from EPRA NTA for properties within the REIT
regime. For properties outside of the REIT regime, deferred tax is included to the extent that it is expected to crystallise, based on the Group’s
track record and tax structuring.
There are no reconciling items between EPRA NTA and the previously reported EPRA NAV metric. EPRA NTA is shown in the table below:
Balance sheet net assets
Adjustments to exclude:
Fair value of derivative financial instruments (net of deferred tax)
Deferred tax liabilities on the revaluation of investment properties
EPRA NTA
Basic net assets per share
EPRA basic NTA per share
2023
2022
£’m
Diluted pence
per share
£’m
Diluted pence
per share
1,935.1
884
1,793.4
820
—
139.2
2,074.3
(1.7)
129.0
1,920.7
948
888
952
879
848
908
The basic and diluted net assets per share have been calculated based on the following number of shares:
Shares in issue
At year end
Adjustment for Employee Benefit Trust (treasury) shares
IFRS/EPRA number of shares (basic)
Dilutive effect of Save As You Earn shares
Dilutive effect of Long Term Incentive Plan shares
IFRS/EPRA number of shares (diluted)
2023
Number
2022
Number
218,039,419
211,927,497
(64,363)
(359,795)
217,975,056
211,567,702
39,269
860,328
87,562
6,956,633
218,874,653
218,611,897
Safestore Holdings plc | Annual report and financial statements 2023
155
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
15. Net assets per share continued
Basic net assets per share is shareholders’ funds divided by the number of shares at the year end. Diluted net assets per share is shareholders’
funds divided by the number of shares at the year end, adjusted for dilutive share options of 899,597 shares (FY2022: 7,044,195 shares). EPRA
diluted net assets per share excludes deferred tax liabilities arising on the revaluation of investment properties. The EPRA NAV, which further
excludes fair value adjustments for debt and related derivatives net of deferred tax, was £2,074.3 million (FY2022: £1,920.7 million), giving EPRA
NTA per share of 948 pence (FY2022: 879 pence). The Directors consider that these alternative measures provide useful information on the
performance of the Group.
EPRA adjusted balance sheet (non-statutory)
Assets
Non-current assets
Current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
EPRA adjusted Net Asset Value
EPRA adjusted basic net assets per share
16. Trade and other receivables
Current
Trade receivables
Less: credit loss allowance
Trade receivables – net
Other receivables
Amounts due from associates (note 12)
Prepayments
2023
£’m
2022
£’m
2,906.8
50.1
2,956.9
(110.4)
(772.2)
(882.6)
2,653.4
52.4
2,705.8
(178.4)
(606.7)
(785.1)
2,074.3
1,920.7
952 pence
908 pence
2023
£’m
21.8
(5.8)
16.0
10.8
0.1
5.9
32.8
2022
£’m
20.6
(5.5)
15.1
8.9
—
7.2
31.2
The creation and release of credit loss allowances have been included in cost of sales in the income statement.
The Group always measures the loss allowance for the trade receivables at an amount equal to lifetime expected credit loss. The expected credit
losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the
debtor’s current financial position, adjusted for factors that are specific to the debtor and an analysis of the debtors, general economic conditions
of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting
date. The Group provides in full against all receivables due over six months past due because historical experience has indicated that these
receivables are generally not recoverable.
There has been no change in the estimation techniques or significant assumptions made during the current reporting period.
The Group writes off a trade receivable when there is information indicating that the debtors are in severe financial difficulty and there is no
realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings.
156
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023
16. Trade and other receivables continued
The following table details the risk profile of trade receivables based on the Group’s provision matrix:
UK
Expected credit loss rate (%)
Estimated total gross carrying amount at default (£’m)
Lifetime ECL (£’m)
Net trade receivables as at 31 October 2023
France
Expected credit loss rate (%)
Estimated total gross carrying amount at default (£’m)
Lifetime ECL (£’m)
Net trade receivables as at 31 October 2023
UK
Expected credit loss rate (%)
Estimated total gross carrying amount at default (£’m)
Lifetime ECL (£’m)
Net trade receivables as at 31 October 2022
France
Expected credit loss rate (%)
Estimated total gross carrying amount at default (£’m)
Lifetime ECL (£’m)
Net trade receivables as at 31 October 2022
Not past due
<28 days
29–60 days
>60 days
—
6.8
—
6.8
6.5%
16.7%
-55.6%
3.1
(0.2)
2.9
1.2
(0.2)
1.0
0.9
(0.6)
0.3
Not past due
<28 days
29–60 days
>60 days
—
1.5
—
1.5
7.1%
-20.0%
71.9%
1.4
(0.1)
1.3
0.5
(0.1)
0.4
6.4
(4.6)
1.8
Not past due
<28 days
29–60 days
>60 days
—
7.5
—
7.5
7.1%
25.0%
57.1%
2.8
(0.2)
2.6
1.2
(0.3)
0.9
1.4
(0.8)
0.6
Not past due
<28 days
29–60 days
>60 days
—
1.4
—
1.4
14.3%
20.0%
85.1%
0.7
(0.1)
0.6
0.5
(0.1)
0.4
4.7
(4.0)
0.7
Total
7.5%
12.0
(1.0)
11.0
Total
49.0%
9.8
(4.8)
5.0
Total
10.1%
12.9
(1.3)
11.6
Total
57.5%
7.3
(4.2)
3.1
Outstanding trade receivables in Spain, the Netherlands, and Belgium totalled £0.5 million (FY2022: £0.4 million); therefore, the risk profile for this
geography has been excluded.
The difference between expected credit loss rates in the UK and France is largely due to the differing processes for collecting overdue debt,
with legal proceedings in France typically taking significantly longer than in the UK.
The above balances are short term (including other receivables) and therefore the difference between the book value and the fair value is not
significant. Consequently, these have not been discounted.
Movement in the credit loss allowance:
Balance at the beginning of the year
Acquisition of subsidiaries
Amounts provided in the year
Amounts written off as uncollectable
Balance at the end of the year
2023
£’m
5.5
—
2.1
(1.8)
5.8
2022
£’m
4.3
0.1
2.5
(1.4)
5.5
Safestore Holdings plc | Annual report and financial statements 2023
157
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 16. Trade and other receivables continued
The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:
Sterling
Euros
2023
£’m
18.7
14.1
32.8
2022
£’m
19.0
12.2
31.2
Amounts due from associates of £0.1 million (FY2022: £nil) relate to the Joint Venture arrangement (note 12), made up of management fees of
£0.1 million (FY2022: £nil). These amounts are considered to be fully recoverable and have not been impaired (FY2022: £nil).
17. Cash and cash equivalents
Cash at bank and in hand
The carrying amounts of the Group’s cash and cash equivalents are denominated in the following currencies:
Sterling
Euros
18. Trade and other payables
Current
Trade payables
Other taxes and social security payable
Other payables
Accruals
Deferred income
The carrying amounts of the Group’s trade and other payables are denominated in the following currencies:
Sterling
Euros
19. Financial liabilities – bank borrowings and notes
Bank loans and notes
Secured
Unsecured
Debt issue costs
2023
£’m
16.9
2023
£’m
4.9
12.0
16.9
2023
£’m
9.4
6.3
2.9
15.0
18.8
52.4
2023
£’m
34.7
17.7
52.4
2023
£’m
2022
£’m
20.9
2022
£’m
6.4
14.5
20.9
2022
£’m
8.0
6.2
4.9
24.8
18.8
62.7
2022
£’m
47.4
15.3
62.7
2022
£’m
—
730.8
(5.0)
725.8
625.1
—
(1.3)
623.8
On 11 November 2022, the Group completed the refinancing of its RCFs which were due to expire in June 2023. The previous £250.0 million
Sterling and €70.0 million Euro RCFs have been replaced with a single multi-currency £400 million facility. In addition, a further £100 million
uncommitted accordion facility is incorporated in the facility agreement. The facility is for a four-year term with two one-year extension options
exercisable after the first and second years of the agreement, the first of which was completed in October.
158
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 19. Financial liabilities – bank borrowings and secured notes continued
The Group has US Private Placement Notes of €358 million (FY2022: €358 million) which have maturities extending to 2024, 2026, 2027, 2028,
2029 and 2033 and £212.5 million (FY2022: £215.5 million) which have maturities extending to 2026, 2028, 2029 and 2031. The blended cost of
interest on the overall debt at 31 October 2023 was 3.58% per annum. Since the year end the Group has successfully refinanced its bank
facilities borrowings (note 32). On 11 November 2022, the Group completed the refinancing of its RCF which were due to expire in June 2023.
The previous £250.0 million Sterling and €70.0 million Euro RCFs were replaced with a single multi-currency £400 million facility. In addition, a
further £100 million uncommitted accordion facility is incorporated in the facility agreement. The facility is for a four-year term with two one-year
extension options exercisable after the first and second years of the agreement, with the first one-year extension being granted in October 2023.
The bank facilities attract a margin over SONIA/EURIBOR. The margin ratchets between 1.25% and 2.50%, by reference to the Group’s
performance against its interest cover covenant. The Company has in issue €50.9 million (FY2022: €50.9 million) 1.59% Series A Senior Notes
due 2024, €70.0 million (FY2022: €70.0 million) 1.26% Series A Notes due 2026, £35.0 million (FY2022: £35.0 million) 2.59% Series B Senior
Notes due 2026, €74.1 million (FY2022: €74.1 million) 2.00% Series B Senior Notes due 2027, £20.0 million (FY2022: £20.0 million) 1.96% Series
A Notes due 2028, €29.0 million (FY2022: €29.0 million) 0.93% Series B Notes due 2028, £50.5 million (FY2022: £50.5 million) 2.92% Series C
Senior Notes due 2029, £30.0 million (FY2022: £30.0 million) 2.69% Series C Senior Notes due 2029, €105.0 million (FY2022: €105.0 million)
2.45% Private Shelf Senior Notes due 2029, £80.0 million (FY2022: £80.0 million) 2.39% Series C Notes due 2031 and €29.0 million (FY2022:
€29.0 million) 1.42% Series D Notes due 2033.
The €358.0 million of Euro denominated borrowings provides a natural hedge against the Group’s investment in the France, Spain, Netherlands
and Belgium businesses, so the Group has applied net investment hedge accounting and the retranslation of these borrowings is recognised
directly in the translation reserve.
Bank loans and unsecured notes are stated before unamortised issue costs of £5.0 million (FY2022: £1.3 million).
Bank loans and unsecured notes are repayable as follows:
Within one year
Between one and two years
Between two and five years
After more than five years
Bank loans and notes
Unamortised debt issue costs
The effective interest rates at the balance sheet date were as follows:
2023
Group
2023
£’m
44.5
—
409.0
277.3
730.8
(5.0)
725.8
2022
£’m
101.8
43.8
158.9
320.6
625.1
(1.3)
623.8
2022
Bank loans (UK term loan)
Monthly, quarterly or six monthly SONIA plus 1.25%
Quarterly or monthly SONIA plus 1.25%
Bank loans (Euro term loan)
Monthly, quarterly or six monthly EURIBOR plus 1.25%
Quarterly EURIBOR plus 1.25%
Private Placement Notes (Euros)
Private Placement Notes (Sterling)
1.80%
2.55%
1.80%
2.55%
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at 31 October 2023 in respect of which all conditions precedent
had been met at that date:
Expiring within one year
Expiring beyond one year
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
Sterling
Euros
Floating rate
2023
£’m
—
297.0
297.0
2023
£’m
377.5
353.3
730.8
2022
£’m
208.4
—
208.4
2022
£’m
291.5
333.6
625.1
Safestore Holdings plc | Annual report and financial statements 2023
159
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 20. Financial instruments
Financial risk management
Financial risk management is an integral part of the way the Group is managed. In the course of its business, the Group is exposed primarily
to foreign exchange risk, interest rate risk, liquidity risk, and credit risk. The overall aim of the Group’s financial risk management policies is to
minimise potential adverse effects on financial performance and Net Asset Values (“NAV”). The Group manages the financial risks within policies
and operating parameters approved by the Board of Directors and does not enter into speculative transactions. Treasury activities are managed
centrally under a framework of policies and procedures approved and monitored by the Board. These objectives are to protect the assets of the
Group and to identify and then manage financial risk. In applying these policies, the Group will utilise derivative instruments, but only for risk
management purposes.
The principal financial risks facing the Group are described below.
Interest rate risk
The Group finances its operations through a mixture of retained profits, issued share capital, bank borrowings, and notes. The Group
borrows in Sterling and Euros at floating rates and, where necessary, uses interest rate swaps to convert these to fixed rates to generate the
preferred interest rate profile and to manage its exposure to interest rate fluctuations. A 1ppt change in interest rates would have a £2 million
(FY2022: £0.5 million) impact on net interest. This sensitivity impact has been prepared by determining average floating interest rates and flexing
these against average floating rate deposits and borrowings by major currency area over the course of the year.
Liquidity risk
The Group’s policy on liquidity risk is to ensure that sufficient cash is available to fund ongoing operations without the need to carry significant
net debt over the medium term. The Group’s principal borrowing facilities are provided by a group of core relationship banks in the form of term
loans and overdrafts, revolving credit facilities and notes. The quantum of committed borrowing facilities available to the Group is reviewed
regularly and is designed to exceed forecast peak gross debt levels. Further details of the Group’s borrowing facilities, including the repayment
profile of existing borrowings and the amount of undrawn committed borrowing facilities, are set out in note 19.
Credit risk
Credit risk arises on financial instruments such as trade and other receivables and short term bank deposits. Policies and procedures exist to
ensure that customers have an appropriate credit history and account customers are given credit limits that are monitored. Short term bank
deposits are executed only with A-rated or above authorised counterparties based on ratings issued by the major rating agencies. Counterparty
exposure positions are monitored regularly so that credit exposures to any one counterparty are within predetermined limits. Overall, the Group
considers that it is not exposed to a significant amount of credit risk. The amount of trade receivables outstanding at the year end does not
represent the maximum exposure to operational credit risk due to the normal patterns of supply and payment over the course of a year.
Based on management information collected as at month ends the maximum level of net trade receivables at any one point during the year
was £16.0 million (FY2022: £18.3 million).
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk in respect of the Euro. Foreign exchange risk arises from future
commercial transactions, recognised assets and liabilities and net investments in foreign operations.
The Group has investments in foreign operations in France, Spain, the Netherlands and Belgium, whose net assets are exposed to foreign
currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through
borrowings denominated in the relevant foreign currencies.
The Group holds Euro denominated loan notes totalling €358 million (FY2022: €358 million) and as such is exposed to foreign exchange risk on
these notes. The foreign exchange risk relating to the notes provides a natural hedge against the Euro denominated assets of its operations in
France, Spain, the Netherlands and Belgium and were 100% effective. As a result, the Group applies net investment hedging in respect of these
loan notes and the change in fair value during the year of £2.9 million (FY2022: £4.6 million) was recognised in other comprehensive income.
The Group holds average rate forward contracts to mainly hedge against the investment exposure of subsidiaries denominated in Euros and the
future earnings generated by these foreign subsidiaries. The hedge rate of these forwards was 1.0751 and they mature in six tranches bi-annually
commencing from October 2020 as detailed further within this note.
At 31 October 2023, if Sterling had weakened by 10% against the Euro with all other variables held constant, pre-tax profit for the year would
have been £0.4 million lower (FY2022: £0.1 million lower). Equity (translation reserve) would have been £22.8 million higher (FY2022: £19.0 million
higher), arising primarily on translation of Euro denominated net assets held by subsidiary companies with a Euro functional currency less the
Euro denominated loan notes.
The Group is not exposed to significant transaction foreign exchange risk as purchases are invoiced in either Sterling or Euros.
160
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 20. Financial instruments continued
Financial risk management continued
Capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt. Being a REIT, the Group is required to distribute as a dividend a minimum of 90%
of its property rental income to shareholders. This is factored into the Group’s capital risk management.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by
total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings and lease liabilities’ as shown in the
consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as equity as shown in the consolidated balance sheet
plus net debt.
The gearing ratios at 31 October 2023 and 2022 were as follows:
Total borrowings (excluding derivatives)
Less: cash and cash equivalents (note 17)
Net debt
Total equity
Total capital
Gearing ratio
2023
£’m
827.2
(16.9)
810.3
1,935.1
2,745.4
29.5%
2022
£’m
719.2
(20.9)
698.3
1,793.4
2,491.7
28.0%
The Group considers that a 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 lease liabilities), below 40% represents an appropriate medium
term capital structure objective. The Group’s LTV ratio was 25.4% at 31 October 2023 (FY2022: 23.6%).
The Group has complied with all of the covenants on its banking facilities during the year.
Financial instruments
Financial instruments disclosures are set out below:
Interest rate swaps
Foreign currency forwards
2023
2022
Asset
£’m
—
—
Liability
£’m
—
—
Asset
£’m
1.2
0.5
Liability
£’m
—
—
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 which use a variety of assumptions based on market conditions existing at
each balance sheet date.
The fair values of all financial instruments are equal to their book value, with the exception of bank loans, which are set out below. The fair value
of loan notes is determined using a discounted cash flow, while the fair value of bank loans drawn from the Group’s bank facilities equates to
book value. The carrying value less impairment provision of trade receivables, other receivables and the carrying value of trade payables and
other payables approximates to their fair value.
The fair value of bank loans is calculated as:
Bank loans
2023
2022
Book value
£’m
Fair value
£’m
725.8
789.3
Book value
£’m
623.8
Fair value
£’m
694.1
Safestore Holdings plc | Annual report and financial statements 2023
161
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 20. Financial instruments continued
Financial instruments continued
Fair value hierarchy
IFRS 13 requires fair value measurements to be recognised using a fair value hierarchy that reflects the significance of the inputs used in the
measurements, according to the following levels:
Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 – inputs for the asset or 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:
Assets per the balance sheet
Derivative financial instruments – Level 2
Amounts due from associates – Level 2
Liabilities per the balance sheet
Derivative financial instruments – Level 2
Bank loans – Level 2
2023
£’m
—
0.1
2023
£’m
—
2022
£’m
1.7
—
2022
£’m
—
725.8
694.1
There were no transfers between Level 1, 2 and 3 fair value measurements during the current or prior year.
Over the life of the Group’s derivative financial instruments, the cumulative fair value gain/loss on those instruments will be £nil as it is the Group’s
intention to hold them to maturity.
Interest rate swaps not designated as part of a hedging arrangement
The notional principal amounts of the outstanding interest rate swap contracts at 31 October 2023 were £nil and €nil (FY2022: £55.0 million and €nil).
At 31 October 2023, the weighted average fixed interest rates were Sterling nil% as the swaps were expired in June 2023 (FY2022: Sterling at 0.6885%),
and floating rates are at quarterly SONIA and the quarterly EURIBOR. The movement in fair value recognised in the income statement was a net
loss of £1.2 million (FY2022: net gain of £1.0 million).
Foreign currency forwards not designated as part of a hedging arrangement
As at 31 October 2023, all average rate forward contracts had matured for the Group (FY2022: one tranche totalling €8.5 million). The movement
in the fair value recognised in the income statement in the period was a net loss of £0.5 million (FY2022: net loss of £1.3 million). The €8.5 million
tranche previously held matured and was settled in April 2023, resulting in a fair value disposal of £0.5 million and a receipt of £0.4 million.
This resulted in £0.4 million recognised as finance income and £0.5 million expense as part of the £1.7 million expense recognised in fair value
movement of derivatives within finance costs in the income statement.
Financial instruments by category
Assets per the balance sheet
Trade receivables and other receivables excluding prepayments
Derivative financial instruments
Cash and cash equivalents
At 31 October 2023
Liabilities per the balance sheet
Borrowings (excluding lease liabilities)
Lease liabilities
Payables and accruals
At 31 October 2023
Financial assets
at amortised cost
£’m
Assets at fair
value through
profit and loss
£’m
22.5
—
16.9
39.4
—
—
—
—
Other financial
liabilities at
amortised cost
£’m
Liabilities at fair
value through
profit and loss
£’m
725.8
101.4
27.2*
854.4
—
—
—
—
Total
£’m
22.5
—
16.9
39.4
Total
£’m
725.8
101.4
27.2
854.4
162
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 20. Financial instruments continued
Financial instruments continued
Financial instruments by category continued
Assets per the balance sheet
Trade receivables and other receivables excluding prepayments
Derivative financial instruments
Cash and cash equivalents
At 31 October 2022
Liabilities per the balance sheet
Borrowings (excluding lease liabilities)
Lease liabilities
Payables and accruals
At 31 October 2022
Financial assets
at amortised cost
£’m
Assets at fair
value through
profit and loss
£’m
24.0
—
20.9
44.9
—
1.7
—
1.7
Other financial
liabilities at
amortised cost
£’m
Liabilities at fair
value through
profit and loss
£’m
623.8
95.4
37.7*
756.9
—
—
—
—
Note:
*
The financial liabilities exclude other taxes and social security payable in FY2023: £6.3 million (FY2022: £6.2 million) as they do not meet the definition of a financial liability
The interest rate risk profile, after taking account of derivative financial instruments, was as follows:
Borrowings
203.0
522.8
Floating rate
£’m
2023
Fixed rate
£’m
Total
£’m
725.8
Floating rate
£’m
46.8
2022
Fixed rate
£’m
577.0
Total
£’m
24.0
1.7
20.9
46.6
Total
£’m
623.8
95.4
37.7
756.9
Total
£’m
623.8
The weighted average interest rate of the fixed rate financial borrowing was 2.10% (FY2022: 2.05%) and the weighted average remaining period
for which the rate is fixed was five years (FY2022: five years).
Maturity analysis
The table below analyses the Group’s financial liabilities and non-settled derivative financial instruments into relevant maturity groupings based
on the remaining period at the balance sheet date to the contractual maturity dates. The amounts disclosed in the table are the contractual
undiscounted cash flows.
2023
Borrowings
Derivative financial instruments
Lease liabilities
Payables and accruals
2022
Borrowings
Derivative financial instruments
Lease liabilities
Payables and accruals
Less than
one year
£’m
One to two
years
£’m
Two to five
years
£’m
More than
five years
£’m
54.6
—
13.8
29.4
97.8
10.2
436.0
297.0
—
13.7
—
23.9
—
36.4
—
472.4
—
77.0
—
374.0
Less than
one year
£’m
One to two
years
£’m
Two to five
years
£’m
More than
five years
£’m
114.7
1.0
13.8
43.9
173.4
53.9
—
12.9
—
66.8
187.8
—
35.9
—
223.7
348.3
—
74.7
—
423.0
Safestore Holdings plc | Annual report and financial statements 2023
163
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 21. Lease liabilities
The Group leases certain of its investment properties under lease liabilities. The average remaining lease term is 10.7 years (FY2022: 10.9 years).
Minimum lease payments
Present value of minimum
lease payments
Within one year
Within two to five years
Greater than five years
Less: future finance charges on lease liabilities
Present value of lease liabilities
Current
Non-current
2023
£’m
13.8
50.1
77.0
140.9
(39.5)
101.4
2022
£’m
13.8
48.8
74.7
137.3
(41.9)
95.4
2023
£’m
13.1
42.0
46.3
101.4
—
101.4
2023
£’m
13.1
88.3
101.4
2022
£’m
13.2
40.6
41.6
95.4
—
95.4
2022
£’m
13.2
82.2
95.4
Amounts recognised within the consolidated income statement include interest on lease liabilities of £5.3 million and variable lease payments not
included in the measurement of the lease liabilities of £0.8 million. Amounts recognised in the consolidated statement of cash flows include lease
liabilities principal payments of £8.8 million and interest on lease liabilities of £5.3 million. The maturity analysis for lease liabilities under
contractual undiscounted cash flows is included in note 20.
22. Deferred income tax
Deferred tax is calculated in full on temporary differences under the liability method using tax rates enacted in each respective jurisdiction
corresponding to when they are expected to reverse. The movement on the deferred tax account was as shown below.
At 1 November
Charge to income statement
Exchange differences
At 31 October
Note
9
2023
£’m
128.2
2.5
1.9
132.6
2022
£’m
96.2
29.8
2.2
128.2
The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction where permitted by IAS 12)
during the period are shown below.
Deferred tax liability
At 1 November 2021
Charge to income statement
Exchange differences
At 31 October 2022
At 1 November 2022
Charge to income statement
Exchange differences
At 31 October 2023
Revaluation of
investment
properties
£’m
96.9
29.9
2.2
129.0
129.0
8.3
1.9
139.2
Other
timing
differences
£’m
0.1
(0.1)
—
—
—
—
—
—
Total
£’m
97.0
29.8
2.2
129.0
129.0
8.3
1.9
139.2
164
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 22. Deferred income tax continued
Deferred tax asset
At 1 November 2021
Credit to income statement
At 31 October 2022
At 1 November 2022
Credit to income statement
At 31 October 2023
Other
timing
differences
£’m
Tax losses
£’m
0.8
—
0.8
0.8
—
0.8
—
—
—
—
5.8
5.8
Total
£’m
0.8
—
0.8
0.8
5.8
6.6
The deferred tax liability due after more than one year is £139.2 million (FY2022: £129.0 million).
As at 31 October 2023, the Group had trading losses of £34.7 million (FY2022: £16.7 million) and capital losses of £36.5 million (FY2022: £36.5 million)
in respect of its UK operations.
As at 31 October 2023, the Group had trading losses of £6.6 million (FY2022: £4.6 million) in respect of its Netherlands and Belgium operations.
As at 31 October 2023, the Group had trading losses of £2.3 million (FY 2022: £nil) in respect of its Spanish operations.
All losses can be carried forward indefinitely. A deferred tax asset of £5.8 million has been recognised in respect of these losses in the current
period, recognising the extent to which the Group believes these losses will be utilised in the future to reduce income tax liabilities.
23. Called up share capital
Called up, allotted, and fully paid
218,039,419 (FY2022: 211,927,497) ordinary shares of 1 pence each
Ordinary shares
The holders of the ordinary shares shall be entitled to one vote for each ordinary share.
During the year the Company issued 6,111,922 ordinary shares (FY2022: 1,103,794 ordinary shares).
2023
£’m
2.2
2022
£’m
2.1
Safestore Holdings plc Sharesave scheme
The Sharesave awards are a savings related award accruing over a three-year period. There are no performance conditions attached to the
awards; as such, the sole condition for vesting is continued service. The fair value of the Sharesave options granted during the year was
assessed by an independent actuary using a Black-Scholes model based on the assumptions set out in the table below:
Number of options granted
Share price at grant date
Exercise price
Risk-free rate of interest
Expected volatility
Expected dividend yield
Expected term to exercise
Value per option
Grant date
25 September 2023
(UK three years)
176,852
758
692
4.32
28.0
4.00
3.10
159
(pence)
(pence)
(% per annum)
(% per annum)
(% per annum)
(years)
(pence)
Safestore Long Term Incentive Plan
The fair values of the awards granted in the accounting period were assessed by an independent actuary using a Monte Carlo model based on
the assumptions set out in the table below. In determining an appropriate assumption for expected future volatility, the historical volatility of the
share price of Safestore Holdings plc has been considered along with the historical volatility of comparator companies.
Number of options granted
Weighted average share price at grant date
Exercise price
Weighted average risk-free rate of interest
Expected volatility
Weighted average expected term to exercise
Weighted average value per option
Grant date July 2023
(PBT EPS part)
(MLA part)
(ESG part)
510,469
193,336
78,535
(pence)
(pence)
(% per annum)
(% per annum)
(years)
(pence)
864
—
5.05%
27.5%
3.00
5.24
864
—
5.05%
27.5%
3.00
5.24
864
—
5.05%
27.5%
3.00
5.24
Safestore Holdings plc | Annual report and financial statements 2023
165
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS 23. Called up share capital continued
Safestore Long Term Incentive Plan continued
Details of the awards outstanding under all of the Group’s share schemes are set out below:
Date of grant
Safestore Holdings plc
Sharesave scheme
24/10/2017
14/08/2019
26/08/2020
20/08/2021
22/08/2022
22/08/2023
Total
Safestore Long Term
Incentive Plan – 2017
29/09/2017
09/10/2017
15/06/2018
05/02/2019
05/07/2019
23/01/2020
Total
Safestore Long Term
Incentive Plan – 2020
18/03/2020
Total
Safestore Long Term
Incentive Plan – 2021
28/01/2021
Total
Safestore Long Term
Incentive Plan – 2022
25/01/2022
29/09/2022
Total
Safestore Long Term
Incentive Plan – 2023
12/07/2023
Total
At
31 October
2022
35,183
16,126
133,500
45,077
94,346
—
324,232
5,094,214
150,000
13,000
81,550
—
149,129
5,487,893
406,191
406,191
347,422
347,422
246,833
—
246,833
Granted
Exercised
Lapsed
At
31 October
2023
Exercise
price
Expiry
date
—
—
—
—
—
176,852
176,852
(35,183)
(15,774)
(4,666)
—
—
—
—
—
(12,704)
(21,446)
(60,980)
(12,676)
—
352
116,130
23,631
33,366
164,176
(55,623)
(107,806)
337,655
352.8p
510.0p
600.0p
824.0p
896.0p
692.0p
01/05/2023
01/03/2023
01/05/2024
01/05/2025
01/05/2026
01/05/2027
—
—
—
—
—
—
—
—
—
—
—
—
4,892
4,892
(5,094,214)
(150,000)
(13,000)
(64,050)
—
(140,797)
(5,462,061)
—
—
—
—
—
—
—
—
—
—
17,500
—
8,332
25,832
0.1p
0.0p
0.1p
0.1p
0.1p
0.1p
28/09/2027
28/09/2027
28/09/2027
28/09/2027
28/09/2027
28/09/2027
(363,807)
(363,807)
(6,796)
(6,796)
35,588
35,588
0.0p
18/03/2023
—
—
—
—
—
—
—
—
—
—
—
—
—
—
347,422
347,422
246,833
4,892
251,725
785,340
785,340
0.0p
28/01/2024
0.0p
0.0p
25/01/2025
25/01/2025
0.0p
12/02/2026
—
—
785,340
785,340
In addition, gross amounts totalling £nil (FY2022: £378,000) in respect of bonuses awarded to Executive Directors for the year ended 31 October
2023 will be deferred into shares which will vest at the end of two years following the financial year in which the bonus is earned. The grant
date is the last day of the financial year in which the performance stage is assessed. The share entitlement is expected to be determined in
January 2024.
The weighted average exercise price of outstanding options under the Sharesave scheme is 690.0 pence (FY2022: 698.6 pence). The weighted
average exercise price of options exercised under the Sharesave scheme was 366.1 pence (FY2022: 400.4 pence).
Own shares
Included within retained earnings are ordinary shares with a nominal value of £644 (FY2022: £3,598) that represent shares held by the Safestore
Employee Benefit Trust in satisfaction of awards under the Group’s Long Term Incentive Plan and which remain unvested.
166
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 24. Cash flow from operating activities
Reconciliation of operating profit to net cash inflow from operating activities:
Cash generated from continuing operations
Profit before income tax
Gain on investment properties
Other exceptional gains
Share of loss in associates
Depreciation
Net finance expense
Employee share options
Changes in working capital:
Decrease in inventories
(Increase)/decrease in trade and other receivables
Decrease in trade and other payables
Increase in provisions
Cash generated from continuing operations
25. Analysis of movement in gross and net debt
Bank loans
Lease liabilities
Total gross debt (liabilities from financing activities)
Cash in hand
Total net debt
Bank loans
Lease liabilities
Total gross debt (liabilities from financing activities)
Cash in hand
Total net debt
Notes
13
5
14
8
2023
£’m
207.8
(93.8)
—
—
1.3
22.6
2.9
—
(1.4)
(11.2)
0.2
128.4
2022
£’m
(623.8)
(95.4)
(719.2)
20.9
(698.3)
2021
£’m
(484.7)
(82.3)
(567.0)
43.2
(523.8)
Cash flows
£’m
Non-cash
movements
£’m
(96.4)
8.8
(87.6)
(3.9)
(91.5)
(5.6)
(14.8)
(20.4)
(0.1)
(20.5)
Cash flows
£’m
Non-cash
movements
£’m
(132.0)
8.4
(123.6)
(22.1)
(145.7)
(7.1)
(21.5)
(28.6)
(0.2)
(28.8)
2022
£’m
498.8
(381.6)
(10.8)
0.3
1.0
15.7
8.6
0.2
0.1
(0.4)
0.3
132.2
2023
£’m
(725.8)
(101.4)
(827.2)
16.9
(810.3)
2022
£’m
(623.8)
(95.4)
(719.2)
20.9
(698.3)
The table above details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated cash flow
statement as cash flows from financing activities.
The cash flows from bank loans make up the net amount of proceeds from borrowings, repayment of borrowings and debt issuance costs.
Non-cash movements relate to the amortisation of debt issue costs of £1.3 million (FY2022: £0.5 million), foreign exchange movements of
£4.3 million (FY2022: £6.8 million) and unwinding of discount to lease liabilities of £14.8 million (FY2022: £21.5 million).
Safestore Holdings plc | Annual report and financial statements 2023
167
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
26. Employees and Directors
Staff costs (including Directors) for the Group during the year
Wages and salaries
Social security costs
Other pension costs
Share-based payments
2023
£’m
24.2
2.0
0.9
2.9
30.0
2022
£’m
25.1
3.8
0.6
8.6
38.1
During the period ended 31 October 2023, the Company’s equity-settled share-based payment arrangements comprised the Safestore Holdings
plc Sharesave scheme and the Safestore Long Term Incentive Plans. The number of awards made under each scheme is detailed in note 23.
No options have been modified since grant under any of the schemes, other than the modification in respect of the LTIP awards for Executive
Directors described in note 23.
Average monthly number of people (including Executive Directors) employed
2023
Number
2022
Number
Sales
Administration
Key management compensation
Wages and salaries
Social security costs
Post-employment benefits
Share-based payments
The key management figures given above include Directors.
Directors
Aggregate emoluments
Company contributions paid to money purchase pension schemes
619
134
753
2023
£’m
2.7
0.3
0.1
1.9
5.0
2023
£’m
2.9
—
2.9
604
123
727
2022
£’m
4.4
(0.3)
0.1
4.5
8.7
2022
£’m
5.7
—
5.7
There were two Directors (FY2022: two) accruing benefits under a money purchase scheme.
27. 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 November 2022, the French Supreme Court delivered a final judgement in respect of litigation for years 2011 to 2013, which resulted in a partial
success for the Group. The Group is separately pursuing litigation in respect of years since 2013 and has lodged an appeal with the French administrative
tribunal against the issues included in assessments for 2013 onwards on which it was ultimately unsuccessful in the French Supreme Court for
the earlier years. A provision is included in the consolidated financial accounts of £2.6 million at 31 October 2023 (31 October 2022: £2.4 million)
to reflect the increased uncertainty surrounding the likelihood of a successful outcome. Of the total provided, £0.2 million has been charged in
relation to the year ended 31 October 2023 within cost of sales (Underlying EBITDA) (31 October 2022: £0.2 million within cost of sales (underlying
EBITDA) and £1.9 million recorded as an exceptional charge in respect of financial years 2012 to 2020). The litigation is expected to be resolved
over the next few years.
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 31 October 2023 is £3.0 million (31 October 2022: £3.0 million).
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.
168
Safestore Holdings plc | Annual report and financial statements 2023
Notes to the financial statements continuedfor the year ended 31 October 2023 28. Contingent liabilities
As part of the Group banking facility, the Company has guaranteed the borrowings totalling £730.8 million (FY2022: £625.1 million) of fellow
Group undertakings by way of a charge over all of its property and assets. There are similar cross-guarantees provided by the Group companies
in respect of any bank borrowings which the Company may draw under a Group facility agreement. The financial liability associated with this
guarantee is considered remote and therefore no provision has been recorded.
The Group also has a contingent liability in respect of property taxation in the French subsidiary as disclosed in note 27.
29. Capital commitments
The Group had £128 million of capital commitments as at 31 October 2023 (FY2022: £146.0 million).
30. Related party transactions
The Group’s shares are widely held. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Transactions with PBC Les Groues SAS
As described in note 12, the Group has a 24.9% interest in PBC Les Groues SAS (“PBC”). During the period, the Group made no transactions
with PBC (FY2022: £0.8 million (€0.9 million). The total amount invested is included as part of its non-current investments in associates. The total
amount outstanding at 31 October 2023 included within trade and other receivables was £nil (FY2022: £nil).
Transactions with CERF II German Storage Topco S a r l (“CERF II”)
As described in note 12, the Group has a 10.0% interest in CERF II German Storage Topco S a r l (“CERF II”). During the period, the Group
recharged £0.4 million.
31. Post-balance sheet events
There are no post balance sheet events.
Safestore Holdings plc | Annual report and financial statements 2023
169
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Company balance sheet
as at 31 October 2023
Company registration number: 04726380
Non-current assets
Investments in subsidiaries
Deferred tax asset
Loans to Group undertakings
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Total assets less current liabilities
Non-current liabilities
Net assets
Equity
Called up share capital
Share premium account
Retained earnings
Total equity
Notes
6
13
7
8
9
10
11
Company
2023
£’m
1.0
2.9
943.9
947.8
1.0
1.6
2.6
950.4
(183.1)
767.3
(524.9)
242.4
2.2
62.0
178.2
242.4
2022
£’m
1.0
—
835.7
836.7
0.2
1.2
1.4
838.1
(108.7)
729.4
(523.3)
206.1
2.1
61.8
142.2
206.1
The Company’s profit for the financial year amounted to £99.0 million (FY2022: £137.8 million profit).
The Company financial statements were approved by the Board of Directors on 16 January 2024 and signed on its behalf by:
A Jones
Chief Financial Officer
F Vecchioli
Chief Executive Officer
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Safestore Holdings plc | Annual report and financial statements 2023
Company statement of changes in equity
for the year ended 31 October 2023
Balance at 1 November 2021
Comprehensive income
Profit for the year
Total comprehensive income
Transactions with owners
Dividends
Increase in share capital
Employee share options
Transactions with owners
Balance at 1 November 2022
Comprehensive income
Profit for the year
Total comprehensive income
Transactions with owners
Dividends
Increase in share capital
Employee share options
Transactions with owners
Balance at 31 October 2023
Company
Called up
share capital
£’m
Share premium
account
£’m
2.1
—
2.1
—
—
—
—
2.1
—
2.1
—
0.1
—
0.1
2.2
61.3
—
61.3
—
0.5
—
0.5
61.8
—
61.8
—
0.2
—
0.2
62.0
Retained
earnings
£’m
52.7
137.8
190.5
(56.9)
—
8.6
(48.3)
142.2
99.0
241.2
(65.9)
—
2.9
(63.0)
178.2
Total
£’m
116.1
137.8
253.9
(56.9)
0.5
8.6
(47.8)
206.1
99.0
305.1
(65.9)
0.3
2.9
(62.7)
242.4
For details of the dividend paid in the year see note 10 in the Group financial statements.
Safestore Holdings plc | Annual report and financial statements 2023
171
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Notes to the Company financial statements
for the year ended 31 October 2023
1. Accounting policies and basis of preparation
The Company financial statements are prepared in accordance with Financial Reporting Standard 101 “Reduced Disclosure Framework”
(“FRS 101”). In preparing these financial statements the Company applies the recognition, measurement and disclosure requirements of United
Kingdom – adopted International Financial Reporting Standards (“IFRS”) but makes amendments where necessary in order to comply with the
Companies Act 2006 and sets out below where advantage of the FRS 101 disclosure exemptions has been taken.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• a cash flow statement and related notes;
• comparative period reconciliations for tangible fixed assets;
• disclosures in respect of transactions with wholly owned subsidiaries;
• disclosures in respect of capital management;
• the effects of new but not yet effective IFRSs;
• IFRS 2 “Share-based Payment” in respect of Group-settled share-based payments; and
• certain disclosures required by IFRS 13 “Fair Value Measurement” and the disclosures required by IFRS 7 “Financial Instruments: Disclosures”.
The above disclosure exemptions are permitted because equivalent disclosures are included in the Group consolidated financial statements.
The financial statements are prepared on a going concern basis under the historical cost convention. The Company’s principal accounting
policies are the same as those applied in the Group financial statements, except as described below:
Investments
Investments held as fixed assets are stated at cost less provision for impairment in value.
2. Results of parent company
As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss account as part of
these financial statements. The Company’s profit for the financial year amounted to £99.0 million (FY2022: £137.8 million profit).
3. Directors’ emoluments
The Directors’ emoluments are disclosed in note 26 of the Group financial statements.
4. Operating profit
The Company does not have any employees (FY2022: none). Details of the Company’s share-based payments are set out in note 23 to the
Group financial statements.
Auditor’s remuneration for the year ended 31 October 2023 was £17,000 (FY2022: £17,000). There were no non-audit services (FY2022: none)
provided by the auditor.
5. Property, plant and equipment
Cost
At 1 November 2022 and at 31 October 2023
Accumulated depreciation
At 1 November 2022
Charge for the year
At 31 October 2023
Net book value
At 31 October 2023
At 31 October 2022
£’m
0.2
0.2
—
—
—
—
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Safestore Holdings plc | Annual report and financial statements 2023
6. Investments in subsidiaries
Cost and net book value
At 1 November 2022
At 31 October 2023
£’m
1.0
1.0
Investments in subsidiaries are stated at cost. A list of interests in subsidiary undertakings is given below. The Directors believe that the carrying
value of the investments is supported by their underlying net assets.
Interests in subsidiary undertakings
The entities listed below are subsidiaries of the Company or the Group. The Group percentage of equity capital (represented by ‘ordinary shares’)
and voting rights is 100% for all subsidiaries listed. The results of all of the subsidiaries have been consolidated within these financial statements.
The registered address of each subsidiary is Brittanic House, Stirling Way, Borehamwood, Hertfordshire WD6 2BT, except where indicated below
by a footnote.
Subsidiary
Safestore Investments 2018 Limited1,11
Safestore Investments Limited11
Safestore Group Limited
Safestore Acquisition Limited11
Safestore Limited11
Safestore Properties Limited11
Spaces Personal Storage Limited11
Safestore Trading Limited11
Mentmore Limited11
Invest Holding2,11
Une Pièce en Plus SAS11,12
OMB Self Storage S.L.U.11
Safestore Netherlands B.V.11
Your Room Self Storage Limited11
Safestore Storage Benelux B.V.11
Safestore Storage B.V.11
M3 Self-Storage B.V.11
Safestore Storage Properties 1 B.V.11
Safestore Storage Properties 2 B.V.11
Safestore Storage Properties 3 B.V.11
Lokabox SA11
Safestore Europe SAS10,11
Investimmo SAS10,11
Safestore Germany Gmbh11,13
Notes:
1 Held directly by the Company.
Country of incorporation
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Luxembourg3
France5
Spain6
Netherlands7
England and Wales
Netherlands8
Netherlands8
Netherlands8
Netherlands8
Netherlands8
Netherlands8
Belgium9
France5
France5
Germany
Principal activity
Holding company
Holding company
Holding company
Holding company
Provision of self storage
Provision of self storage
Provision of self storage
Non-trading
Holding company
Holding company
Provision of self storage
Provision of self storage
Holding company
Provision of self storage
Holding company
Provision of self storage
Provision of self storage
Provision of self storage
Provision of self storage
Provision of self storage
Provision of self storage
Provision of self storage
Provision of self storage
Holding company
2 Formerly named Access Storage Holdings (France) S.à r.l.
3 Registered address: 412F, route d’Esch, L-2086 Luxembourg.
4 UK tax resident; registered address prior to liquidation: St Martin’s House, Le Bordage, St Peter Port, Guernsey.
5 Registered address: 1, rue François Jacob, 92500 Rueil Malmaison, France.
6 Registered address: Calle Marina 153, 08013 Barcelona, Spain.
7 Registered address: Herikerbergwerg 88, 1101CM Amsterdam, 1077ZX Amsterdam, Netherlands.
8 Registered address: Beijnesweg 19, 2031BB Haarlem, Netherlands.
9 Registered address: Chaussée de Bruxelles 151-155, 6040 Charleroi, Belgium.
10 Incorporated in July 2022.
11
These companies are exempt from the requirement to prepare individual audited financial statements in respect of the year ended 31 October 2023 by virtue of Sections 479A and 479C
of the Companies Act 2006.
12 Merged under the EU Merger Directive on 31 October 2022 resulting in the cessation of Compagnie de Libre Entreposage France SAS.
13 Incorporated in February 2023.
Safestore Holdings plc | Annual report and financial statements 2023
173
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Notes to the Company financial statements continued
for the year ended 31 October 2023
7. Non-current assets – loans to Group undertakings
Loans to Group undertakings
2023
£’m
943.9
943.9
2022
£’m
835.7
835.7
Amounts owed by Group undertakings are unsecured and repayable on demand; however, the Directors consider it unlikely that repayment will
arise in the short term and in practice amounts owed by Group undertakings are used to meet the capital requirements of the borrower with no
realistic repayment in the near future. It is for this reason that the amounts are classified as non-current assets.
Interest is charged to Group undertakings on amounts totalling £524.9 million (FY2022: £523.3 million). The remaining amounts owed by Group
undertakings are interest free. The movement in loans to Group undertakings relates to interest charged of £11.1 million (FY2022: £9.9 million)
and additional amounts loaned and recharged of £97.1 million (FY2022: £240.0 million).
8. Trade and other receivables
Trade receivables
Other receivables
2023
£’m
—
1.0
1.0
2022
£’m
—
0.2
0.2
Trade and other receivables due within one year were tested for impairment in line with the Group as described in note 2. As at 31 October 2023,
these amounts due are considered fully recoverable and no provision has been made (FY2022: £nil).
9. Current liabilities
Amounts owed to Group undertakings
Trade payables
Accruals and deferred income
2023
£’m
179.8
—
3.3
183.1
2022
£’m
98.6
0.2
9.9
108.7
Amounts owed to Group undertakings are unsecured, interest free and repayable on demand. The Directors have received assurance that
repayment of amounts owed to Group undertakings will not arise in the short term.
10. Non-current liabilities
Loan notes
2023
£’m
524.9
524.9
2022
£’m
523.3
523.3
Of the above, £277.4 million (FY2022: £320.6 million) is due after more than five years.
The Company has in issue €50.9 million (FY2022: €50.9 million) 1.59% Series A Senior Notes due 2024, €70.0 million (FY2022: €70.0 million)
1.26% Series A Notes due 2026, £35.0 million (FY2022: £35.0 million) 2.59% Series B Senior Notes due 2026, €74.1 million (FY2022: €74.1 million)
2.00% Series B Senior Notes due 2027, £20.0 million (FY2022: £20.0 million) 1.96% Series A Notes due 2028, €29.0 million (FY2022: €29.0 million)
0.93% Series B Notes due 2028, £50.5 million (FY2022: £50.5 million) 2.92% Series C Senior Notes due 2029, £30.0 million (FY2022: £30.0 million)
2.69% Series C Senior Notes due 2029, €105.0 million (FY2022: €105.0 million) 2.45% Private Shelf Senior Notes due 2029, £80.0 million
(FY2022: £80.0 million) 2.39% Series C Notes due 2031 and €29.0 million (FY2022: €29.0 million) 1.42% Series D Notes due 2033.
11. Called up share capital
Called up, allotted, and fully paid
218,039,419 (FY2022: 211,927,497) ordinary shares of 1 pence
Ordinary shares
The holders of the ordinary shares shall be entitled to one vote for each ordinary share.
For details of share options see note 23 in the Group financial statements.
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Safestore Holdings plc | Annual report and financial statements 2023
2023
£’m
2.2
2022
£’m
2.1
12. Contingent liabilities
For details of contingent liabilities see note 28 in the Group financial statements.
13. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using tax rates enacted in each respective jurisdiction
corresponding to when they are expected to reverse. The movement on the deferred tax account was as shown below.
Deferred tax asset
At 1 November 2021
Credit to income statement
At 31 October 2022
At 1 November 2022
Credit to income statement
At 31 October 2023
Other
timing
differences
£’m
Tax losses
£’m
—
—
—
—
—
—
—
—
—
—
2.9
2.9
Total
£’m
—
—
—
—
2.9
2.9
The deferred tax asset receivable after more than one year is £2.9 million (FY2022: £nil) and will be utilised by reducing future taxable profit.
As at 31 October 2023, the Company had unutilised trading losses of £11.2 million (FY2022: £nil).
Safestore Holdings plc | Annual report and financial statements 2023
175
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Glossary
Absorption rate
The rate at which rentable space is filled.
Adjusted Diluted EPRA
Earnings per Share
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, 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.
Adjusted earnings growth
The increase in adjusted EPS year-on-year.
Adjusted EPS
Adjusted profit after tax divided by the diluted weighted average number of shares in issue during the financial
year.
Adjusted profit before tax
The Company’s pre-tax EPRA earnings measure with additional Company adjustments.
Average net achieved rent per
sq ft
Storage revenue divided by average occupied space over the financial year.
Average rental growth
The growth in average net achieved rent per sq ft year-on-year.
Average storage rate
Revenue generated from self storage revenues divided by the average square footage occupied during the
period in question.
BREEAM
Cap and collar
An environmental rating assessed under the Building Research Establishment’s Environmental Assessment
Method.
Term used in connection with interest rates. A cap is an upper limit or maximum interest rate that will apply, while
a collar is the minimum interest rate.
Capitalisation rate
The ratio of net operating income to property asset value.
Compound Annual Growth Rate
(“CAGR”)
The annual rate of return over a specified period of time longer than one year.
CER
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).
Closing net rent per sq ft
Annual storage revenue generated from in-place customers divided by occupied space at the balance sheet
date.
Earnings per Share (“EPS”)
Profit for the financial year attributable to equity shareholders divided by the average number of shares in issue
during the financial year.
EBITDA
EPRA
Earnings before interest, tax, depreciation and amortisation.
The European Public Real Estate Association, a real estate industry body. This organisation has issued Best
Practices Recommendations with the intention of improving the transparency, comparability and relevance of the
published results of listed real estate companies in Europe.
EPRA earnings
The IFRS profit after taxation attributable to shareholders of the Company excluding investment property
revaluations, gains/losses on investment property disposals and changes in the fair value of financial instruments.
EPRA Earnings per Share
EPRA earnings divided by the average number of shares in issue during the financial year.
EPRA Net Asset Value (“NAV”)
IFRS net assets excluding the mark-to-market on interest rate derivatives effective cash flow and deferred
taxation on property valuations where it arises. It is adjusted for the dilutive impact of share options.
EPRA NAV per share
EPRA NAV divided by the diluted number of shares at the year end.
EPRA Net Tangible Assets
(“NTA”)
A proportionally consolidated measure, representing the IFRS net assets excluding the mark-to-market on
derivatives and related debt adjustments, the mark-to-market on the convertible bonds, the carrying value
of intangibles and deferred taxation on property and derivative valuations. It includes the valuation surplus on
trading properties and is adjusted for the dilutive impact of share options.
EPRA NTA per share
EPRA NTA divided by the diluted number of shares held at the year end.
Equity
All capital and reserves of the Group attributable to equity holders of the Company.
Euro Interbank Offered Rate
(“EURIBOR”)
The average benchmark interest rate at which Eurozone banks offer unsecured short term lending on the
inter-bank market.
Exit yield
Represents the capital value of an investment property at the end of the investment term expressed in
percentage terms.
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Safestore Holdings plc | Annual report and financial statements 2023
Free cash flow
Cash flow before investing and financing activities but after leasehold rent payments.
Gross property assets
The sum of investment property and investment property under construction.
Gross value added
The measure of the value of goods and services produced in an area, industry or sector of an economy.
ICR
Joint Venture
ICR is interest cover ratio and is calculated as the ratio of Underlying EBITDA after leasehold rent to underlying
finance charges.
A business arrangement in which two or more parties agree to pool their resources for the purpose of
accomplishing a specific task.
Like-for-like occupancy
Excludes the closing occupancy of new stores acquired, opened and closed in the current financial year in both
the current financial year and comparative figures.
Like-for-like revenue
Loan to value (“LTV”)
Excludes the impact of new stores acquired, opened and closed in the current or preceding financial year in both
the current year and comparative figures.
Gross debt (excluding lease liabilities) as a proportion of the valuation of investment properties and investment
properties under construction (excluding lease liabilities).
Maximum lettable area (“MLA”) The total square feet (“sq ft”) available to be fitted out to rent to customers.
Net debt
Net initial yield
Total borrowings (including ‘current and non-current borrowings and lease liabilities’ as shown in the
consolidated balance sheet) less cash and cash equivalents.
The forthcoming financial year’s net operating income expressed as a percentage of capital value, after adding
notional purchaser’s costs.
Net promoter score (“NPS”)
An index ranging from -100 to 100 that measures the willingness of customers to recommend a company’s
products or services to others. The Company measures NPS based on surveys sent to all of its move-ins and
move-outs.
Net rent per sq ft
Storage revenue generated from in-place customers divided by occupancy.
Occupancy
The space occupied by customers divided by the MLA expressed as a %.
Occupied space
The space occupied by customers in sq ft.
Pipeline
The Group’s development sites.
Property Income Distribution
(“PID”)
A dividend, generally subject to withholding tax, that a UK REIT is required to pay from its tax exempt property
rental business and which is taxable for UK-resident shareholders at their marginal tax rate.
Real Estate Investment Trust
(“REIT”)
A tax regime which in the UK exempts participants from corporation tax both on UK rental income and gains
arising on UK investment property sales, subject to certain conditions.
Real Estate Transfer Tax
(“RETT”)
RETT is levied in respect of the acquisition of the legal and/or beneficial ownership of real estate located in
the Netherlands, certain rights concerning such Dutch real estate, and shares in entities that qualify as a real
estate entity.
REVPAF
Sterling Overnight Index
Average (“SONIA”)
REVPAF is an alternative performance measure used by the business. REVPAF stands for revenue per available
square foot (“REVPAF”) and is calculated by dividing revenue for the period by weighted average available square
feet for the same period.
The effective overnight interest rate paid by banks for unsecured transactions in the British Sterling market.
Store EBITDA
Store earnings before interest, tax, depreciation and amortisation.
Task Force on Climate-related
Financial Disclosures (“TCFD”)
The Financial Stability Board created the TCFD to improve and increase reporting of climate-related
financial information.
Total shareholder return
(“TSR”)
The growth in value of a shareholding over a specified period, assuming dividends are reinvested to purchase
additional units of shares.
Underlying EBITDA
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. Underlying EBITDA therefore excludes all leasehold rent charges.
Underlying profit before tax
Underlying EBITDA less leasehold rent, depreciation charged on property, plant and equipment and net finance
charges relating to bank loans and cash.
Safestore Holdings plc | Annual report and financial statements 2023
177
OVERVIEWSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Directors and advisers
Directors
David Hearn
(Non-Executive Chairman)
Frederic Vecchioli
(Chief Executive Officer)
Andy Jones
Ian Krieger
(Chief Financial Officer)
(Non-Executive Director)
Gert van de Weerdhof
(Non-Executive Director)
Laure Duhot
(Non-Executive Director)
Delphine Mousseau
(Non-Executive Director)
Jane Bentall
Avis Darzins
(Non-Executive Director)
(Non-Executive Director)
Company Secretary
David Orr
Registered office
Brittanic House
Stirling Way
Borehamwood
Hertfordshire WD6 2BT
Registered company number
04726380
Websites
www.safestore.co.uk
www.safestore.com
Bankers
National Westminster Bank plc
ABN Amro Bank N.V.
Crédit Industriel et Commercial
Bank of China
Citibank N.A.
Banco de Sabadell S.A.
Independent auditor
Deloitte LLP
Statutory Auditor
2 New Street Square
London EC4A 3TR
Legal advisers
Travers Smith LLP
10 Snow Hill
London EC1A 2AL
Eversheds LLP
115 Colmore Row
Birmingham B3 3AL
Brokers and financial advisers
Investec Bank Plc
30 Gresham Street
London EC2V 7QN
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Safestore Holdings plc | Annual report and financial statements 2023
Citigroup Global Markets Limited
Citigroup Centre
33 Canada Square
London E14 5LB
Financial PR advisers
Instinctif Partners
65 Gresham Street
London EC2V 7NQ
Shareholder information
Registrar
Link Group
The Registry
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Telephone: +44 (0)371 664 0300
(Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable
international rate).
Lines are open between 9.00am and 5.30pm Monday to Friday, excluding public holidays in England and Wales.
Email: shareholderenquiries@linkgroup.co.uk
Share Portal Enquiries: shareholderenquiries@linkgroup.co.uk
Share Portal: www.signalshares.com
Through the website of our Registrar, Link Group, shareholders are able to manage their shareholding by registering for the Share Portal, a free,
secure, online access to their shareholding.
Please visit our investor relations website
For all the latest news and updates at www.safestore.com.
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Safestore Holding plc’s commitment to environmental issues
is reflected in this Annual Report, which has been printed on
Magno Satin, an FSC® certified material. This document was
printed by Park Communications using its environmental print
technology, which minimises the impact of printing on the
environment, with 99% of dry waste diverted from landfill.
Both the printer and the paper mill are registered to ISO 14001.
Safestore Holdings plc | Annual report and financial statements 2023
179
Safestore Holdings plc
Brittanic House
Stirling Way
Borehamwood
Hertfordshire WD6 2BT
Tel: 020 8732 1500
Fax: 020 8732 1510
www.safestore.co.uk
www.safestore.com
Further information and investor
updates can be found on our website at
www.safestore.co.uk/corporate