REG - Safestore Hldgs plc - Final Results
16/01/2025 07:00
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RNS Number : 5287T Safestore Holdings plc 16 January 2025
16 January 2025
Safestore Holdings plc
("Safestore", "the Company" or "the Group")
Results for the year ended 31 October 2024
Continued improvement in UK trading and strong growth in Expansion Markets
Key measures Year ended 31 October 2024 Year ended 31 October 2023 Change(1) Change-CER(2)
Underlying and Operating Metrics - total
Revenue (£'m)(3) 223.4 224.2 (0.3%) 0.2%
Underlying EBITDA (£'m)(4) 135.4 142.2 (4.8%) (4.2%)
Closing Occupancy (let sq ft - million)(5) 6.41 6.23 2.9% n/a
Closing Occupancy (% of MLA)(6) 74.6% 77.0% (2.4ppt) n/a
Maximum Lettable Area ("MLA") 8.59 8.09 6.2% n/a
Average Storage Rate (£ / sq ft)(7) 29.85 30.26 (1.4%) (0.8%)
REVPAF (£ / sq ft)(8) 26.69 27.70 (3.7%) (3.1%)
Adjusted Diluted EPRA Earnings per Share (pence)(9) 42.3 47.9 (11.7%) n/a
Free Cash flow (£'m)(10) 86.2 89.2 (3.4%) n/a
EPRA Basic NTA per Share (pence)(11) 1,091 952 14.6% n/a
Underlying and Operating Metrics - like-for-like(12)
Revenue (£'m) 217.9 218.9 (0.5%) 0.0%
Storage Revenue (£'m) 183.6 186.4 (1.5%) (0.9%)
Ancillary Revenue (£'m) 34.3 32.6 5.2% 5.5%
Underlying EBITDA (£'m) 134.7 142.4 (5.4%) (4.9%)
Closing Occupancy (let sq ft - million) 6.11 6.12 (0.2%) n/a
Closing Occupancy (% of MLA) 78.8% 79.3% (0.5ppt) n/a
Average Occupancy (let sq ft - million) 6.05 6.12 (1.1%) n/a
Average Storage Rate (£ / sq ft) 30.33 30.46 (0.4%) 0.2%
REVPAF (£ / sq ft) 28.18 28.39 (0.7%) (0.2%)
Statutory Metrics
Operating Profit (£'m) 425.8 230.4 84.8% n/a
Profit before Tax (£'m) 398.6 207.8 91.8% n/a
Diluted Earnings per Share (pence) 170.1 91.8 85.3% n/a
Dividend per Share (pence) 30.4 30.1 1.0% n/a
Net Cash Flow from Operating Activities (£'m) 95.9 98.0 (2.0%) n/a
Basic net assets per share (pence) 1,020 888 14.8% n/a
Highlights
Resilient Financial performance
· Group revenue at CER grew 1.1% year on year excluding £2.2m of
insurance premium tax ("IPT") relating to the sale of customer goods insurance
in FY 2023 not repeated this year
· Group revenue flat year on year: down 0.3% at actual FX rates and
up 0.2% at CER
· Group like-for-like revenue in CER flat year on year
· Underlying EBITDA down 4.2% in CER reflecting market inflationary
pressures on key cost lines and the impact of new developments
· Adjusted Diluted EPRA EPS down 11.7% at 42.3 pence (FY 2023: 47.9
pence)
· 1% increase in the dividend for the year to 30.4 pence per share
(FY2023: 30.1 pence per share) in line with our progressive policy
Strategic Progress
· Opening of ten new stores and extensions in the year with a
further five opened following year end, adding a total of 386,000 sq ft of MLA
· Development pipeline of an additional 26 stores with a total of
1.3m sq ft MLA, equivalent of 16% of the portfolio at year end with potential
to add, together with other open non like-for-like stores, £35-£40 million
of future EBITDA at stabilisation
· Acquisition of 19,800 sq ft trading store in Chelsea Embankment,
London
· Purchase of the freehold interests of two stores in Le Marais
(Paris) and Manchester
· Continued growth of German joint venture portfolio with three
development opportunities secured in the year
· Following year end, entered into a joint venture with Nuveen to
acquire the EasyBox self-storage business in Italy with ten operating stores
and two under development totalling 780,000 sq ft of MLA. This follows the
Group strategy of entering high-potential markets with low levels of supply
alongside partners. Safestore will operate the business, leveraging Group
capabilities
Strong and Flexible Balance Sheet
· 13.6% increase in property revaluation (including investment
properties under construction) to £3,284.1 million (FY 2023: £2,890.9
million)
· 14.6% increase in EPRA Basic NTA per share to £10.91 (FY 2023:
£9.52)
· Exercise of RCF accordion option to increase facility size by
£100.0 million to £500.0 million.
· Exercise of RCF extension option to increase maturity date by one
year to November 2028
· Net Debt £899.5 million (FY 2023: £810.3 million). Group
loan-to-value ratio ("LTV"(14)) at 25.1% (FY 2023: 25.4%) and interest cover
ratio ("ICR"(15)) at 4.3x (FY 2023: 6.7x)
· Ample liquidity with unutilised bank facilities of £144.3m at 31
October 2024 (FY 2023: £197.0m)
· €51.0 million USPP matured and repaid in FY 2024 and in
December 2024, following year end, new €70.0 million USPP issued with an
eight-year term
Frederic Vecchioli, Safestore's Chief Executive Officer, commented:
"We have delivered resilient operating performance in challenging market
conditions and have made good progress on our strategic priorities.
Over the year, the Group's revenue stabilised with improving performance in
the UK supported by solid results in Paris and strong growth in our Expansion
Markets.
In the UK, we are encouraged by the continued improvements in domestic
customer occupancy with increasingly positive levels of occupied space vs
prior year through the second half of the year.
We have presented our other countries combined together as "Expansion Markets"
to reflect their importance in driving growth for the Group. These markets
have once again delivered strong performance in the year both in like-for-like
growth and in total revenue terms through the additional revenue from new
stores.
In the financial year, we added 386,000 sq ft of MLA (equivalent to 5% of the
start of year MLA) through ten new stores and extensions with a further five
stores with 263,400 sq ft of MLA opened following year end. In addition our
development pipeline includes 26 stores with a projected total MLA of
1,338,200 sq ft, reflecting 16% of year end MLA, providing a clear pathway for
further future revenue growth.
The borrowings for the expansion of our asset base has led to higher interest
costs, with a £5.5 million increase year on year. Adjusted EPRA earnings of
£92.7 million reflect an 11.8% decrease year on year.
We have further strengthened our balance sheet by extending our RCF by £100
million to £500 million as well as its term by one year to provide additional
liquidity. Following year end, we successfully issued a new €70 million
eight-year USPP.
Our business performance remains robust with strong levels of cash generation
and our development programme is adding the potential for meaningful EBITDA
growth, so we remain confident to recommend a full year dividend of 30.4 pence
per share, representing a 1% increase on prior year.
Finally, I would like to thank all of our colleagues across our stores and
head office whose commitment, hard work and customer-centric approach have
been instrumental in driving our performance and sustained growth."
Notes
We prepare our financial statements using IFRS. However, we also use a number
of adjusted measures in assessing and managing the performance of the
business. These measures are not defined under IFRS and they may not be
directly comparable with other companies' adjusted measures and are not
intended to be a substitute for, or superior to, any IFRS measures of
performance. These include like-for-like figures, to aid in the comparability
of the underlying business as they exclude the impact on results of purchased,
sold, opened or closed stores; and constant exchange rate ("CER") figures are
provided in order to present results on a more comparable basis, removing FX
movements. These metrics have been disclosed because management review and
monitor performance of the business on this basis. We have also included a
number of measures defined by EPRA, which are designed to enhance transparency
and comparability across the European Real Estate sector; see notes 9 and 11
below and 'Non-GAAP financial information' in the notes to the financial
statements.
1 - Where reported amounts are presented either to the nearest £0.1 million
or to the nearest 10,000 sq ft, the effect of rounding may impact the reported
percentage change.
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).
3‐ Store Protect replaced our customer goods insurance programme in the UK
from 1 November 2023, attracting VAT rather than Insurance Premium Tax
("IPT"). FY 2023 revenue includes £2.2 million representing 12% IPT on
insurance sales for that financial year. The IPT in FY 2023 has been excluded
from like‐for‐like figures to aid comparability
4 - Underlying EBITDA is defined as Operating Profit before exceptional items,
share-based payments, corporate transaction costs, change in fair value of
derivatives, gain/loss on investment properties, variable lease payments,
depreciation and the share of associate's depreciation, interest and tax.
Underlying EBITDA therefore excludes all leasehold rent charges. Underlying
profit before tax is defined as underlying EBITDA less leasehold rent,
depreciation charged on property, plant and equipment and net finance charges
relating to bank loans and cash.
5 - Occupancy excludes offices but includes bulk tenancy.
6 - MLA is Maximum Lettable Area. Measured in square feet ("sq ft")
7 - 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.
8 - Revenue per Available Square Foot ("REVPAF") is an alternate performance
measure used by the business and is considered by management as the best KPI
of economic performance of a mature self-storage asset as it is the net
outcome of the occupancy/rate mix plus ancillary sales. It is calculated by
dividing revenue for the period by weighted average available square feet for
the same period.
9 - Adjusted Diluted EPRA EPS is based on the European Public Real Estate
Association's definition of Earnings and is defined as profit or loss for the
period after tax but excluding corporate transaction costs, change in fair
value of derivatives, gain/loss on investment properties and the associated
tax impacts. The Company then makes further adjustments for the impact of
exceptional items, IFRS 2 share-based payment charges, exceptional tax items,
and deferred tax charges. This adjusted earnings is divided by the diluted
number of shares. The IFRS 2 cost is excluded as it is written back to
distributable reserves and is a non-cash item (with the exception of the
associated National Insurance element). Therefore, neither the Company's
ability to distribute nor pay dividends are impacted (with the exception of
the associated National Insurance element). The financial statements will
disclose earnings on a statutory, EPRA and Adjusted Diluted EPRA basis and
will provide a full reconciliation of the differences in the financial year in
which any LTIP awards may vest.
10 - Free cash flow is defined as cash flow before investing and financing
activities but after leasehold rent payments.
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 14.
12 - Like‐for‐like information includes only those stores which have been
open throughout both the current and prior financial years, with adjustments
made to remove the impact of new and closed stores, as well as corporate
transactions
13 - Expansion Markets comprise Spain, the Netherlands and Belgium plus income
earned in relation to the joint venture in Germany (previously shown in the UK
segment)
14 - LTV ratio is Loan-to-Value ratio, which is defined as net debt (excluding
lease liabilities) as a proportion of the valuation of investment properties
and investment properties under construction (excluding lease liabilities).
15 - ICR is interest cover ratio and is calculated as the ratio of underlying
EBITDA after leasehold rent to underlying finance charges.
Reconciliations between underlying metrics and statutory metrics can be found
in the financial review and financial statements sections of this
announcement.
Summary
The Group has delivered a resilient performance in FY 2024 in challenging
market conditions, particularly in the UK and Paris, whilst continuing to make
good progress with our strategic priorities including our ongoing development
programme.
The Group's reported revenue decreased by 0.3% or £0.8 million during the
year at actual exchange rates, growing 0.2% at CER. Revenue grew 1.1% year on
year at constant exchange rates, excluding the insurance premium tax relating
to the sale of customer goods insurance in the UK in FY 2023 not repeated this
year due to changes in the nature of the protection afforded to customers.
Group like-for-like ("LFL") revenue at CER was flat year on year reflecting
gradually improving performance over the course of FY 2024 in the UK led by
increases in occupancy by domestic customers. Both closing occupancy of 78.8%
and an average rate of £30.51 (at CER) for the Group were broadly stable year
on year on a LFL basis.
In the UK, we have seen steadily improving domestic demand and we are
accelerating the conversion of larger units (over 250 sq ft) into smaller ones
more suitable for domestic customers, reducing the historic over-weight
towards business customers in the UK.
In Paris, LFL revenue increased by 1.4% driven by growth in average storage
rate of 1.3% to €42.33 reflecting continued progress in a challenging
market. Revenue in Paris grew for the 26(th) consecutive year.
Expansion Markets revenue grew 29% to €20.6 million in the year driven by
strong LFL growth supported by the income from new stores. Expansion Markets
comprise Spain, the Netherlands and Belgium together with our Joint Venture in
Germany. Revenue increases were seen in all markets on a LFL basis with a
12.9% increase overall. Non-LFL stores contributed £3.4 million to revenue in
the year for the segment.
Group Underlying EBITDA decreased by £6.8 million (4.8%) year on year driven
by a 7.4% increase in underlying costs principally due to increased employee
remuneration, higher bad debt provisions and increased business rates.
Interest expense increased year on year as result of additional borrowings to
fund our development programme and higher rates on floating rate debt. Coupled
with the decrease in Underlying EBITDA, the increase in finance costs of
£5.5m led to an 11.7% year on year decrease in Adjusted Diluted EPRA earnings
to 42.3 pence.
Statutory operating profit increased by 84.8% to £425.8 million (FY 2023:
£230.4 million) as a result of a larger gain from investment properties
revaluation reflecting the healthy asset transactional market in the year.
The Group delivered eight new stores through developments, two extensions plus
one acquisition in the year. At the end of October 2024, we had a pipeline of
31 new stores to open in 2025 and beyond. The pipeline, together with non-LFL
stores, is projected to add £35-£40 million of EBITDA in FY 2029 but will be
dilutive to EPS in FY 2025 due to additional interest costs and expected
customer move-in trajectories.
Investment Property value increased by £393.2 million with a 53bps reduction
in exit yields, taking the value of the portfolio to £3,284.1 million. The
increase included £122.6 million of capital expenditure on new stores and
extensions in the year.
The business remains in a strong position with robust cash generation, and
therefore the Board is pleased to recommend a 1% increase in the dividend for
the full year to 30.4 pence per share (FY2023: 30.1 pence per share) in line
with our progressive policy.
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 19% of our existing MLA and our balance sheet strength and
flexibility provide us with the opportunity to consider further selective
development and acquisition opportunities across all of our markets, either
self-funded or within joint ventures.
We expect our development programme together with its associated financing to
be dilutive to earnings in FY 2025 and FY 2026 before becoming highly
accretive to the Group in future years as the stores stabilise. We believe
that, on stabilisation, an incremental £35-£40 million of EBITDA will be
added by the pipeline together with the stores opened in the last two years.
Our business model has proven to be highly resilient as we navigate the
current economic backdrop. We believe the Group is strongly positioned with
low leverage at 25.1% LTV, 57% fixed-rate debt, continued strong operating
margins and the potential for material earnings growth through the opening of
our pipeline space together with our existing stores. This is all underpinned
by our 25-year track record of delivering market leading operational
performance.
In the first two months of FY 2025 financial year, we have seen continued
improvements in LFL revenue growth with Group LFL increasing 2.4% year on year
at CER. This included the UK delivering a 0.9% increase and Paris 1.0% with
Expansion Markets delivering further strong growth of 21.4%
Looking ahead for FY 2025, we anticipate that there will be further market
inflationary pressure on operating costs with an expected 7% to 8% increase on
a LFL basis. This includes the impact from store staff costs in the UK rising
through a combination of further increases in the National Living Wage and
additional employers' national insurance costs, business rates increases as a
result of inflation uplifts and the unwinding of transitional relief on
rateable value increase, and higher energy costs as we come to the end of long
term purchasing contracts. In addition, interest expense is also expected to
further rise by £6-7 million in FY 2025 predominantly as a result of
additional borrowing to finance our development programme.
Notes to Editors
For further information, please contact:
Safestore Holdings PLC
Frederic Vecchioli, Chief Executive Officer 020 8732 1500
Simon Clinton, Chief Financial Officer
www.safestore.com (http://www.safestore.com)
Instinctif Partners
Galyna Kulachek 020 7457 2020
Tim Pearson Safestore@Instinctif.com (mailto:Safestore@Instinctif.com)
Analyst and investor presentation
An analyst and investor presentation will be held at 9:30am GMT today, 16
January 2025.
To register for the live webcast, please email Safestore@Instinctif.com
(mailto:Safestore@Instinctif.com)
· Safestore is the UK's largest self-storage group with 203
stores on 26 November 2024; comprising 138 in the UK (including 77 in London
and the South East with the remainder in key metropolitan areas such as
Manchester, Birmingham, Glasgow, Edinburgh, Liverpool, Sheffield, Leeds,
Newcastle, and Bristol), 30 in the Paris region, 15 in Spain, 14 in the
Netherlands and 6 in Belgium. In addition, the Group operates 7 stores in
Germany under a Joint Venture agreement with Carlyle, and has recently entered
a new Joint Venture agreement in Italy with the acquisition of EasyBox with
Nuveen.
· Safestore operates more self-storage sites inside the M25 and
in central Paris than any competitor providing more proximity to customers in
the wealthiest and more densely populated UK and French markets.
· Safestore was founded in the UK in 1998. It acquired the
French business "Une Pièce en Plus" ("UPP") in 2004 which was founded in 1998
by the current Safestore Group CEO Frederic Vecchioli.
· Safestore has been listed on the London Stock Exchange since
2007. It entered the FTSE 250 index in October 2015.
· The Group provides storage to around 96,000 personal and
business customers.
· As of 31 October 2024, Safestore had a maximum lettable area
("MLA") of 8.59 million sq ft (excluding the expansion pipeline stores) of
which 6.41 million sq ft was occupied.
· Safestore employs around 800 people in the Group.
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
The last year has demonstrated Safestore's continued resilience and has seen
significant strategic and operational progress. After five 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 2.2 million sq ft of fully invested unlet
space, building on the significant operational improvements made over the
current management team's tenure.
In addition, 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 48 and opened 39 stores
over the last eight years creating value for all stakeholders of the Group.
This includes our investments in Expansion Markets (Spain, the Netherlands and
Belgium) where we see a significant opportunity for growth both in terms of
new stores and from like for like improvements. Expansion Markets totaled 32
stores with 1.29 million sq ft of MLA and contributed €20.6 million of
revenue in the 2024 financial year.
Our joint venture with Carlyle in Germany provides us with an exciting
platform to gain exposure to that market. In addition, following year end, we
entered into a new joint venture with Nuveen acquiring together EasyBox in
Italy, which provides the best possible entry point to a great new market with
the lowest self-storage supply of major western European economies. I believe
that Safestore's highly scalable platform and international experience will
allow us to capitalise on these opportunities.
We have further strengthened our balance sheet in the year with the exercise
of an additional £100 million option on our revolving credit facility which
takes total funds available under the committed RCF to £500m. In addition,
the term of the RCF was extended by one year in FY 2024 to a new maturity of
November 2028. Following the year end, a new USPP of €70.0m was issued in
December 2024, with a maturity in December 2032 and a fixed rate of interest
of 4.03%.
Financial results
Revenue for the year was £223.4 million, 0.3% behind last year (FY 2023:
£224.2 million), or 0.2% ahead on a constant currency basis. Like-for-like
revenue was flat year on year on a CER basis.
On a total basis, underlying EBITDA decreased by 4.8% to £135.4 million (FY
2023: £142.2 million) and on a constant currency basis by 4.2%.
Statutory operating profit increased by £195.4 million to £425.8 (FY 2023:
£230.4 million), reflecting a higher investment property valuation gain in FY
2024.
Adjusted Diluted EPRA Earnings per Share reduced by 11.7% to 42.3 pence (FY
2023: 47.9 pence). Adjusted Diluted EPRA Earnings per Share has grown by 31.6
pence or 295% over the last eleven years. Statutory diluted Earnings per Share
increased to 170.1 pence (FY 2023: 91.8 pence) as a result of the valuation
gain on investment properties.
The Group's balance sheet remains robust with a Group LTV ratio of 25.1% (FY
2023: 25.4%) and an ICR of 4.3x (FY 2023: 6.7x) 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 eleven years, the management and store
teams have delivered a Total Shareholder Return of 748.0%, 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.
ESG (Environmental, Social and Governance)
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 been given
our first ever Gold rating in the 2024 EPRA Sustainability BPR awards. The
Global ESG Benchmark for Real Assets ("GRESB") has once again awarded us an
'A' rating in its 2024 Public Disclosures assessment. MSCI has also awarded us
our second-highest rating of 'AA' for ESG.
We continue to demonstrate our commitment to our ESG agenda by linking the
margin on our £500 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 report and the sustainability section of our Annual Report.
Board changes
Following Ian Krieger stepping down from the Board in the year Jane Bentall
took over as Senior Independent Director and Chair of the Audit Committee in
2024. Jane has extensive experience and understanding of operating
multi-site, consumer-led businesses and has been on the Board of Safestore
since May 2022.
Simon Clinton replaced Andy Jones as CFO in April 2024, following Andy's
retirement. Simon was previously Chief Financial Officer of Logicor, one of
Europe's largest logistics real estate companies. He joined Logicor as
Director of Group Finance in February 2017, before being promoted to Chief
Financial Officer in May 2018. Prior to this, Simon held a number of senior
finance roles at Tesco and Diageo. Simon is a qualified chartered accountant.
Dividend
Reflecting the Group's progressive dividend policy, the Board is pleased to
recommend a final dividend of 20.4 pence per share (FY 2023: 20.2 pence)
resulting in a full year dividend up 1% to 30.4 pence per share (FY 2023: 30.1
pence).
Over the last eleven years, the Group has grown the dividend by 24.6 pence per
share during which period the Group has returned to shareholders a total of
216.5 pence per share. The total dividend for the year is covered 1.39 times
by Adjusted EPRA Diluted Earnings (1.59 times in 2023). Shareholders will be
asked to approve the dividend at the Company's Annual General Meeting on 19
March 2025 and, if approved, the final dividend will be payable on 15 April
2025 to Shareholders on the register at close of business on 13 March 2025.
Summary
The Board remains confident in the future growth prospects for the Group and
will continue its progressive dividend policy in 2025 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 Share.
David Hearn
15 January 2025
Our Strategy
The Group intends to continue to deliver on its proven strategy of leveraging
its well-located asset base, management expertise, infrastructure, scale and
balance sheet strength and further increase its Earnings per Share by:
· optimising the trading performance of the existing portfolio;
· maintaining a strong and flexible capital structure; and
· taking advantage of selective portfolio management and expansion
opportunities in our existing markets and, if appropriate, in attractive new
geographies either through a joint venture or in our own right.
In addition, the Group's strategy is pursued whilst maintaining a strong focus
on Environmental, Social and Governance ("ESG") matters and a summary of our
ESG strategy is provided further on.
Optimisation of Portfolio
With the opening of 41 new stores since 2016, in addition to the acquisitions
of 48 existing trading stores, we have established and strengthened our
market-leading portfolio in the UK and Paris and have entered the Spanish,
Dutch and Belgian markets. We have a high quality, fully invested estate in
all geographies and, of our 199 stores as at 31 October 2024, 107 are in
London and the South East of England or in Paris, with 60 in the other major
UK cities and 32 in the Expansion Markets region. In the UK, we now operate 51
stores within the M25, which represents a higher number of stores than any
other competitor.
Our MLA has increased to 8.6m sq ft as at 31 October 2024 (31 October 2023:
8.1m sq ft). At the current occupancy level of 74.6%, we have 2.2m sq ft of
fully invested unoccupied space (3.8m sq ft including the development pipeline
and post-period end openings), of which 1.6m sq ft is in our UK stores, 0.3m
sq ft is in Paris and 0.3m sq ft is in Expansion Markets. In total, unlet
space including pipeline is the equivalent of c. 88 additional stores located
across the estate and provides the Group with significant opportunity to grow
further. We have a proven track record of filling our vacant space at
efficiently managed rates, so we view this availability of space with
considerable optimism. We will also benefit from the operational leverage from
the fact that this available space is fully invested, and the related
operating costs are essentially fixed and already included in the Group cost
base. Our continued focus will be on ensuring that we drive occupancy to
utilise this capacity at carefully managed rates.
There are three elements that are critical to the optimisation of our existing
portfolio:
· enquiry generation through an efficient marketing operation;
· strong conversion of enquiries into new lets; and
· disciplined central revenue management and cost control.
As we develop new assets, we normally build out internal fittings in phases
spread over a number of years after the initial store opening, enabling
efficient capital deployment and optimisation of unit mix based on actual
local demand. If we exclude this unavailable space, we have a Current Leasable
Area ("CLA") of 8.2m sq ft as at 31 October 2024. As a result, Occupancy as a
% of CLA at the year-end was 78.3%.
Digital Marketing Expertise
Awareness of self-storage remains relatively low with half of the UK
population either knowing very little or nothing about self-storage (source:
SSA Annual Report 2024). In the UK, many of our new customers are using
self-storage for the first time and it is largely a brand-blind purchase.
Typically, customers requiring storage start their journey by conducting
online research using generic keywords in their locality (e.g. 'storage in
Borehamwood', 'self-storage near me') which means that geographic coverage and
search engine prominence remain key competitive advantages.
We believe there is a clear benefit of scale in the generation of customer
enquiries. The Group has continued to invest in technology and in-house
expertise which has resulted in the development of a leading digital marketing
platform that has generated 34% enquiry growth for the Group over the last
five years, an annual growth of 6%. Our in-house expertise and significant
annual budget have enabled us to deliver strong results.
The Group's online strength has meant that it continues to be the predominant
channel for customer acquisition. Online enquiries this year made up 89% of
all our enquiries in the UK (FY 2023: 89%), with 86% in France (FY 2023:
84%). The majority of our online enquiries now originate from a mobile device
(71% share in UK for FY 2024, FY 2023: 65%), 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 year as a
percentage of revenue were in line with the previous year at 4.1% (FY 2023:
3.8%).
During the period and post-period end, the Group demonstrated its ability to
integrate newly developed and acquired stores into its marketing platform with
successful new openings. We have clearly demonstrated that our marketing
platform is transferrable into multiple overseas geographies.
Central Revenue Management and Cost Control
We continue to pursue a balanced approach to revenue management. We aim to
optimise revenue per available space ("REVPAF") by improving the utilisation
of the available space in our portfolio at carefully managed rates. Our
central pricing team is responsible for the management of our dynamic pricing
policy, which is set weekly at the granular level of store / unit size,
together with the implementation of promotional offers and the identification
of additional ancillary revenue opportunities. Whilst prices are managed
centrally, where it is appropriate the store sales teams have the ability to
offer discretionary discounts or a Lowest Price Guarantee in the event that a
local competitor is offering a lower price in order to optimise REVPAF.
Average rates are predominantly influenced by:
· the store location and catchment area;
· the volume of enquiries generated online and available space;
· the store team's skills at converting these enquiries into new
lets at the expected price; and
· the very granular pricing policy and the confidence provided by
analytical capabilities and systems that smaller players might lack.
We believe that Safestore has a very strong proposition in each of these
areas.
Costs are managed centrally with a lean structure maintained at Head Office.
Enhancements to cost control are continually considered and, particularly in
the context of the current inflationary environment, the cost base is
challenged on an ongoing basis.
Motivated and effective store teams benefiting from investment in training and
development
Training, People and Performance Management
In what is still a relatively immature and poorly understood market, customer
service and selling skills at the point of sale remain essential in earning
the trust of the customer and in driving the appropriate balance of volumes
and unit price in order to optimise revenue growth in each store.
Our enthusiastic, well-trained, and customer-centric sales team remains a key
differentiator and a strength of our business. Understanding the needs of our
customers and using this knowledge to develop trusted in-store advisors is a
fundamental part of driving revenue growth and market share.
We have 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, a Gold accreditation in 2018, and a Platinum
accreditation in 2021, we were delighted to be awarded the 'we invest in
people' Platinum accreditation again in March 2024. Platinum is the highest
accolade in the Investors in People scale and achieving Platinum twice is a
fantastic achievement, placing us as an employer of choice.
IIP is the international standard for people management, defining what it
takes to lead, support, and engage people effectively to achieve sustainable
results. Underpinning the standard is the IIP framework, reflecting the latest
workplace trends, essential skills and effective structures required to
outperform in any industry. Investors in People enables organisations to
benchmark against the best in the business on an international scale. We are
proud to have our colleagues recognised to such a high standard.
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 deliver our award-winning development
programmes.
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 internal Store Manager Development ("SMD") programme, and
we are pleased with our progress to date.
Our SMD programme has been in place since 2016 and is a key part of succession
planning for future Store Managers. All eleven participants of our 2023 SMD
programme successfully completed their Level 3 Management and Leadership
apprenticeship, and we're delighted that ten of those participants were
awarded distinctions.
In January 2024, we commenced our seventh SMD programme. 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.
Our Senior Leadership Development programme ("LEAD") focuses on developing our
high performing Store Managers, aimed at preparing them for more senior roles
within the business. We are proud that all eight participants of our Senior
Leadership Development programme (LEAD Academy) successfully completed their
Level 5 Management and Leadership apprenticeship; seven of those participants
were awarded Distinctions.
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 store colleagues for
their performance with bonuses of up to 50% of basic salary based on their
achievements against individual targets for new lets, occupancy, and ancillary
sales. In addition, our Values and Behaviours framework is overlaid on
individuals' performance in order to assess performance and development needs
on a quarterly basis.
Our 'Make the Difference' people forum, launched in 2018, enables frequent
opportunities for us to hear and respond to our colleagues. Our network of 15
"People Champions" collects 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 opened in FY 2024 a
further two fully automated, unmanned, satellite self-storage centres in
Eastleigh and London Paddington Park West, having opened its first in
Christchurch in FY 2023. 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. Following this success, additional unmanned satellite
stores are currently under various stages of assessment and 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. Our belief is that our
multi-channel sales strategy utilising fully automated channels, colleague
interaction through our store sales teams or our specialist call centre and
National Accounts teams provide each type of customer with the most tailored
and easy way to buy self-storage at Safestore.
Customer Satisfaction
In February 2024, Safestore UK won the Feefo Platinum Trusted Service award
for the fifth time. The award is given to businesses which have achieved Gold
standard for three consecutive years. It is an independent mark of excellence
that recognises businesses for delivering exceptional experiences, as rated by
real customers. In addition to using Feefo, Safestore invites customers to
leave a review on a number of review platforms, including Google and
Trustpilot. Our ratings for each of these three providers in the UK are
between 4.7 and 4.9 out of 5. In France, Une Pièce en Plus uses Google and
Trustpilot to obtain independent customer reviews and in 2024, achieved a 4.7
out of 5 and a "TrustScore" of 4.6 out of 5 respectively. In Spain, our
business collects customer feedback via Google reviews and has attained a
score of 4.9 out of 5. Belgium also collects feedback via Google and has a
score of 4.7 in 2024.
Strong and Flexible Capital Structure
We believe that our capital structure is appropriate for our business, with a
strong balance sheet which provides us with the flexibility to take advantage
of carefully evaluated development and acquisition opportunities.
The Group finances its operations through a combination of equity and debt. As
at 31 October 2024, the loan to value ("LTV") ratio for the Group was 25.1%
(31 October 2023: 25.4%), which is well below the 40% maximum policy rate
which the Board considers appropriate.
Both this LTV and the interest cover ratio ("ICR") of 4.3x for FY 2024 (FY
2023: 6.7x) provides us with significant headroom compared to our banking
covenants (LTV of 60% and ICR of 2.4x). The reduction in ICR in year reflects
higher interest costs from increased borrowings to finance our development
programme together with higher interest rates during the year.
At year end, the Group's weighted average cost of debt on drawn debt was 3.96%
and 57% of our drawn debt attracts fixed rates of interest (FY 2023: 3.58% and
67% respectively). The weighted average maturity of the Group's drawn debt was
4.2 years (FY 2023: 4.7 years) following the repayment of the 2024 USPP in May
2024.
We have ample liquidity with £144.3 million of undrawn bank facilities at 31
October 2024 following the exercise of an additional £100.0 million accordion
option on our revolving credit facility ("RCF") which takes total funds
available under our committed RCF to £500 million. In addition, the term of
the RCF was extended by one year in FY 2024 to a new maturity of November
2028.
Together with the available financing, the Group's operations are strongly
cash generative and produce sufficient free cash flow to fund our progressive
dividend policy together with our development programme.
Recent refinancing
Following the year end, a new USPP of €70.0 million was issued in December
2024 with a maturity in December 2032 and a fixed rate of interest of 4.03%.
With the inclusion of this note, the weighted average term to maturity of the
Group's debt is 4.5 years and average cost of debt is 3.97% on a pro-forma
basis.
ESG Strategy
ESG: Sustainable Self-Storage
Our purpose - to add stakeholder value by developing profitable and
sustainable spaces that allow individuals, businesses and local communities to
thrive - is supported by the 'pillars' of our sustainability strategy: our
people, our customers, our community and our environment. In addition, the
Group and its stakeholders recognise that its efforts are part of a broader
movement and we have, therefore, aligned our objectives with the UN
Sustainable Development Goals ("SDGs"). We reviewed the significance of each
goal to our business, their importance to our stakeholders and assessed our
ability to contribute to each of them. Following this materiality exercise, we
have chosen to focus our efforts in the areas where we can have a meaningful
impact. These are 'Decent work and economic growth' (goal 8), 'Sustainable
cities and communities' (goal 11), 'Responsible consumption and production'
(goal 12) and 'Climate action' (goal 13).
Sustainability is embedded into day-to-day responsibilities at Safestore and,
accordingly, we have opted for a governance structure which reflects this. Two
members of the Executive Management team co-chair a cross-functional
sustainability group consisting of the functional leads responsible for each
area of the business.
In 2018, the Group established medium term targets in each of the 'pillars'
towards which the Group continued to progress in FY 2024.
Our people: Safestore was awarded the prestigious Investors in People ("IIP")
Platinum accreditation in both 2021 and 2024. Platinum is the highest level of
accreditation possible to achieve on our 'We invest in people' accreditation.
It means policies and practices around supporting people are embedded in every
corner of Safestore. In a platinum company, everyone knows they have a part to
play in the company doing well and are always looking for ways to improve.
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 and
Google) of over 90% in each market. The introduction of digital contracts
offers both customer convenience and a reduction in printing, saving an
estimated 959,055 printed pages this year.
Our community: we remain 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 FY 2024, the space occupied by local charities across 118 stores was
23,862 sq ft and worth £1.0 million.
Our environment: we are committed to ensuring our buildings are constructed
responsibly and their ongoing operation has a minimal impact on local
communities and the environment. It should be noted that …. the self-storage
sector is not a significant consumer of energy when compared with other
segments of the real estate landscape. According to a 2024 report by KPMG and
EPRA, 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 lower than the self-storage sector average.
In FY 2024, the Group continued progress towards achieving operational carbon
neutrality (target 2035) by implementing key elements of the transition plan,
specifically removal of gas-burning appliances from a further six stores in
the UK estate and ensuring all new openings meet or exceed the minimum energy
performance standard of a 'B' rating and include energy solar PV installations
where viable. In May 2024, we signed a green electricity contract in Belgium
which means stores in all Group markets are now powered by zero carbon
electricity.
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 its first ever Gold rating in
the 2024 EPRA Sustainability BPR awards. The Global ESG Benchmark for Real
Assets ("GRESB") has once again awarded Safestore an 'A' rating in its 2024
Public Disclosures assessment. MSCI has also awarded Safestore its
second-highest rating of 'AA' for ESG.
Portfolio Management
Our approach to store development and acquisitions in the UK, Paris, Expansion
Markets and our joint ventures, with Carlyle in Germany and Nuveen in Italy
continues to be pragmatic, flexible and focused on the return on capital with
a proven track record of double-digit cash-on-cash store returns at maturity.
Our experienced and skilled property teams in all geographies continue to seek
investment opportunities in new sites to add to the store pipeline. However,
investments will only be made if they comply with our disciplined and strict
investment criteria. Our preference is to acquire sites that are capable of
being fully operational within 18 - 24 months from completion.
Since 2016, the Group has opened 41 new stores in the UK (20), Paris (8),
Spain (8) and the Netherlands (5) adding 1,816,700 sq ft of MLA.
In addition, the Group has acquired 48 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, Apeldoorn in the Netherlands and Chelsea Self Storage. These
acquisitions added a further 1,909,800 sq ft of MLA and revenue performance
has been enhanced in all cases under the Group's ownership.
In the same period, we have also completed the revenue enhancing extensions
and refurbishments of 14 stores adding a net 156,900 sq ft of fully invested
space to the estate. All of these stores are performing in line with or ahead
of their business plans.
The Group's pipeline of new developments and store extensions (see below) at
year end is projected to add 1,607,100 sq ft of future MLA, the equivalent to
c. 19% of the existing portfolio as at the end of October 2024. The
outstanding capital expenditure of £150.0 million for the pipeline is
expected to be funded from the Group's existing resources.
Property Pipeline
Openings of New Stores and Extensions
Opened FY 2024 FH/LH MLA Development Type
New Developments
St Albans FH 56.0 Conversion
Eastleigh LH 14.5 Conversion, Satellite
London - Paddington Park West FH 13.0 Conversion, Satellite
Paris - South Paris FH 55.0 New build
Madrid - South 2 FH 67.9 Conversion
Randstad - Aalsmeer FH 48.4 New build
Randstad - Almere FH 43.3 Conversion
Randstad - Rotterdam FH 71.0 New build
Redevelopments and Extensions
London - Holloway FH 9.5 Extension
Paris - Poissy FH 7.4 Extension
Total opened FY 2024 386.0
In the year we opened four stores and extensions in the UK, two in Paris, one
in Spain, and three in the Netherlands adding in total 386,000 sq ft of MLA to
our portfolio, contributing significantly to our operational scale in our
growing EU markets. The new stores include two new satellite stores, adding
capacity in high-demand locations whilst leveraging our existing cost base and
customer relationships.
We have a total pipeline of 31 developments and extensions opening in FY 2025
and beyond which is expected to add a total of 1.6 million sq ft, representing
19% of portfolio MLA as at October 2024. This includes the five new stores and
extensions below which had already opened in the first two months of the
financial year.
Opened since year end FH/LH MLA Development Type
New Developments
London - Lea Bridge FH 80.9 New build
Madrid - North East (Barajas) FH 57.2 Conversion
Madrid - South West (Carabanchel) FH 45.4 Conversion
Pamplona FH 64.5 Conversion
Total new developments 248.0
Redevelopments and Extensions
Paris - Pyrénées LH 15.4 Extension
Total opened in November 2024 263.4
In addition to the 263,400 sq ft of MLA added in November, there is a pipeline
of nine stores with 419,500 sq ft of MLA projected to be opening during the
remainder of FY 2025. This brings a total additional MLA projected to be
delivered in FY 2025 to 682,900 sq ft.
Remaining FY 2025 Openings FH/LH MLA Type Status
London - Walton FH 20.7 Conversion C, UC
Paris - East 1 (Noisy-le-Grand) FH 60.0 Conversion C, PG
Paris - West 3 (Mantes-Buchelay) FH 58.0 New build C, UC
Paris - North West 1 (Taverny) FH 54.0 Conversion C, UC
Paris - La Défense FH 44.0 Mixed-Use Facility C, UC
Barcelona - Central 2 (Manso) LH 20.0 Conversion C, UC
Randstad - Amsterdam LH 65.4 New build C, UC
Randstad - Utrecht FH 50.0 Conversion C, UC
Brussels - Zaventem FH 47.4 New build C, UC
Total remaining to open in 2025 419.5
FY 2026 Openings FH/LH MLA Type Status
London - Woodford FH 68.7 New build C, PG
London - Watford FH 57.5 New build CE, PG
London - Wembley FH 55.3 New build C, PG
London - Kingston FH 55.0 New build CE, STP
London - Romford FH 41.0 New build C, PG
Norwich FH 52.7 New build CE, STP
Hemel Hempstead FH 51.3 New build CE, PG
Shoreham FH 47.1 New build CE, PG
Paris - West 4 (Orgeval) FH 53.0 New build CE, PG
Paris - West 1 (Conflans) FH 56.0 New build C, UC
Paris - Colombes FH 65.5 Conversion CE, PG
Madrid - Perseo FH 18.5 Conversion CE, STP
Total Opening in 2026 621.6
Beyond FY 2026 Openings FH/LH MLA Type Status
London - Old Kent Road FH 75.6 New build C, STP
London - Belvedere FH 56.3 New build C, STP
London - Bermondsey FH 50.0 New build C, STP
Welwyn Garden City FH 51.0 New build CE, STP
Barcelona - Hospitalet FH 64.3 New build CE, STP
Total Opening beyond 2026 297.2
*C = completed, CE = contracts exchanged, STP = subject to planning, PG =
planning granted, UC = under construction
Following the openings in November 2024, our ongoing pipeline of new store
developments comprises 26 projects identified which will deliver an additional
1,338,300 sq ft of new space. The developments are located in all of our
markets and are focused in the key cities of London (nine stores, 480,100 sq
ft), Paris (seven stores, 390,500 sq ft), Madrid and Barcelona (three stores,
102,800 sq ft), the Randstad in the Netherlands (two stores, 115,400 sq ft),
Brussels (one store, 47,400 sq ft) and other regional cities (four stores,
202,100 sq ft).
This pipeline, together with the stores delivered in the first two months of
FY 2025, is expected to deliver 682,900 sq ft of new space opening in FY 2025
and 969,000 sq ft in later years. All property projects require planning
permission and of the projects 62% are projects with planning granted and 38%
are still subject to planning. Typically, we aim to structure our development
opportunities to minimise planning risk and working capital by making
completion on contracts for sites to also be subject to planning.
Of the pipeline development projects, two (8%) are leasehold sites where the
city centre locations have limited freehold development opportunities but are
where we believe there is strong customer demand.
Following the year end, the Group entered into a joint venture with Nuveen,
jointly acquiring the EasyBox business in Italy. The business has ten open
stores in the key cities across the country with a further two under
development. Safestore will manage the business on behalf of the joint
venture, leveraging Group expertise. EasyBox is a leading platform in the
emerging Italian storage market with a strong trading track record. In Italy,
the supply of self-storage at 0.02 sqft per inhabitant is equivalent to 2% of
that of the UK. The investment will provide the initial critical size of
operations as well as 20 years of marketing and trading data points that will
be key to inform potential further investment decisions over time.
Portfolio Summary
The self-storage market has been growing consistently for over 20 years across
many European countries, but few regions offer the unique characteristics of
London and Paris, both of which consist of large, wealthy and densely
populated markets. In the London region, the population is 13 million
inhabitants with a density of 5,200 inhabitants per square mile in the region,
11,000 per square mile in central London and up to 32,000 per square mile in
the densest boroughs.
The population of the Paris urban area is 10.7 million inhabitants with a
density of 9,300 inhabitants per square mile in the urban area and 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. 250 storage centres within the M25 as
compared to only c. 125 in the Paris urban area. The density of self-storage
supply is estimated to be 0.89 sq ft per inhabitant in the UK and 0.40 sq ft
in Paris.
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. All
these new markets, particularly Madrid and Barcelona, are wealthy, high
density conurbations with very high barriers to entry. The density of
self-storage supply is estimated at 0.50 sq ft per inhabitant in the
Netherlands, 0.20 sq ft in Belgium, 0.54 sq ft in Madrid and 0.65 sq ft in
Barcelona.
Store Portfolio by Region London & Rest of UK Paris Expansion Group
South East UK Total Markets Total
Number of Stores 76 61 137 30 32 199
Let Square Feet (m sq ft) 2.375 2.164 4.539 1.094 0.777 6.410
Maximum Lettable Area (m sq ft) 3.056 2.822 5.878 1.424 1.290 8.592
Average Let Square Feet per store (k sq ft) 31 35 33 36 24 32
Average Store MLA (k sq ft) 40 46 43 47 40 42
Closing Occupancy % 77.7% 76.7% 77.2% 76.8% 60.3% 74.6%
Average Rate (£ per sq ft) 36.39 23.04 29.94 36.04 19.84 29.85
Revenue (£'m) 101.4 60.8 162.2 43.7 17.5 223.4
Average Revenue per Store (£'m) 1.33 1.00 1.18 1.46 0.55 1.12
We have a strong position in both the UK and Paris markets operating 137
stores in the UK, 76 of which are in London and the South East, and 30 stores
in Paris.
In the UK, 62% of our revenue is generated by our stores in London and the
South East. On average, our stores in London and the South East are smaller
than in the rest of the UK but the rental rates achieved are materially
higher, enabling these stores to typically achieve similar or better margins
than the larger stores. In London we operate 51 stores within the M25, more
than any other competitor.
In addition, we have 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.
In France, we have a leading position in the heart of the affluent City of
Paris market with nine stores branded as Une Pièce en Plus ("UPP") ("A spare
room"). Over 57% 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, including three post period-end openings, the Group has fourteen
stores open in Barcelona and Madrid and one open in Pamplona in the Basque
Country/ Navarra region, which has clusters of population benefitting from
above average economic dynamics.
The Group has fourteen stores open in the Netherlands and six in Belgium. The
pipeline contains a further two stores in the Netherlands and one in Belgium.
Overall Expansion Markets now comprises 35 stores, a 25% increase from the
2023 year-end position.
Market
The self-storage market in the UK, France, Spain, the Netherlands and Belgium
remains relatively immature compared to geographies such as the USA and
Australia. The SSA Annual Survey (May 2024) confirmed that self-storage
capacity stands at 0.89 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 0.41 sq ft per capita. This compares with closer to 7 sq ft per
inhabitant in the USA and 2 sq ft in Australia. In the UK, in order to reach
the US density of supply, it would require the addition of around another
18,500 stores as compared to c. 2,700 currently.
In Spain, the Netherlands and Belgium, penetration is similarly low. In Spain,
capacity is around 0.43 sq ft per head of population and the consumer is
serviced by 1,300 stores. In the Netherlands, penetration is 0.73 sq ft per
head of population (750 stores) and in Belgium 0.23 sq ft per head of
population (153 stores).
The Group has a joint venture in Germany. The German market is one of Europe's
more under-penetrated markets with just 0.27 sq ft of storage space per capita
and, according to the 2024 FEDESSA report, there are 1,028 facilities in the
country and 24.7 million sq ft of lettable space.
Post year end, the Group entered into a joint venture in Italy. This market
has the lowest penetration of major economies in Western Europe with 0.03 sq
feet per head of population (130 stores).
Our interpretation of the most recent 2024 SSA report is that operators remain
optimistic about their trading and the future growth of the industry. In the
past few years, the self-storage industry has undergone an unprecedented
period of change largely due to developments in technology. 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 in Europe. We estimate new
supply to represent around 5% to 6% 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 as many
new developments happen in areas with lower barriers to entry in which we tend
not to operate.
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 2024 report the SSA estimates that 2,706 self-storage
facilities exist in the UK market including around 1,012 container-based
operations. At the point in time that the 2024 survey was written, Safestore
was the industry leader by number of stores with 133 wholly owned sites. In
aggregate, the top seven leading operators account for around 20% of the UK
store portfolio. The remaining c. 2,182 self-storage outlets (including
container-based operations) are independently owned in small chains or single
units.
Our 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, have a greater presence in the outskirts and second belt of
Paris.
Our Spanish business currently operates in Barcelona and Madrid with one store
in Pamplona. 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).
Belgium is one of the more under-penetrated markets in Europe with just 153
stores and 0.23 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 had not heard of
self-storage at all. Since 2014, this statistic has only fallen 14ppts from
61%. 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. 52% of respondents in the 2024 SSA
Survey were unable to name a self-storage business in their local area. 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 (76% in 2023) 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. 30% in 2023).
There are numerous drivers of self-storage growth. Most domestic 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.
Our domestic customers' need for storage is often driven by life events such
as births, marriages, bereavements, divorces or by the housing market
including house moves and developments and moves between rental properties. We
have estimated that UK owner-occupied housing transactions drive around 8-13%
of the Group's new lets.
At 41% of square feet occupied, our customer base in the UK is more heavily
weighted to business customers than the rest of the Group due to historic
property configurations. As such we are accelerating the conversion of larger
units (over 250 sq ft) into smaller ones to serve a wider range of customers.
Through this partitioning programme, we anticipate significantly reducing the
current c 1.0 million sq ft of larger units so that the UK ratio of domestic
to business customers comes closer to the 70/30 split seen in the rest of the
Group.
Our customer base is resilient and diverse and consists of around 94,000
domestic, business and National Accounts customers across the Group.
Business and Personal Customers UK Paris Expansion Markets
Numbers (% of total) 77% 81% 88%
Square feet occupied (% of total) 59% 63% 80%
Average Length of Stay (months) 17.8 25.4 24.0
Business Customers
Numbers (% of total) 23% 19% 12%
Square feet occupied (% of total) 41% 37% 20%
Average Length of Stay (months) 26.1 27.1 26.1
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 and inflation
and the conflict in the Ukraine, the industry has been exceptionally
resilient. In the context of continued uncertain economic conditions, 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, we have leading positions in the two most important
and demographically favourable markets in Europe. In addition, our regional
presence in the UK is unsurpassed and contributes to the success of our
industry-leading National Accounts business. In the UK, Safestore is the
leading operator by number of wholly owned stores. With 53% of customers
travelling for less than 15 minutes to their storage facility (2024 SSA
Survey). Our national store footprint represents a competitive advantage.
Based on the revenue reported by Cushman and Wakefield in the various SSA
reports, our market share in the UK based on revenue is 21%.
The Group's capital-efficient portfolio of 203 stores in the UK, Paris and
Expansion Markets 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 2024 of 13.2 years (FY 2023: 12.4
years). Although our property valuation for leaseholds is 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.
From time to time, we will purchase the freehold on leasehold properties, when
these become available at appropriate prices.
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 35% of stores (including the pipeline) 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. Taking this context into account, 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 geographies outside the UK and Paris to
make a significant contribution to Group expansion.
The Group has 12 stores in Spain, including four opened in the year, 14 stores
in the Netherlands and six in Belgium. There are a further nine stores in the
development pipeline (Spain - six, the Netherlands - two, Belgium - one) at
the end of October 2024.
These stores in Expansion Markets are principally located in the key
metropolitan areas of the Randstad, Barcelona, Madrid and Brussels. The growth
opportunity from these markets is in both the availability of high-quality
sites for new stores and LFL income growth as the markets mature.
In 2022, Safestore entered the German self-storage market via a joint venture
with Carlyle, which has acquired the myStorage business. After acquiring the
freehold to one of their sites, myStorage now has five medium to long-term
leasehold in addition to a further leasehold expiring in 2026. The 326,000 sq
ft of MLA is spread across Berlin, Heidelburg, Mannheim, Fürth, Nuremburg,
Neu-Ulm and Reutlingen.
Following year end, Safestore entered in a new joint venture in Italy. The
EasyBox business comprises ten open stores and two under development in the
key economic centres of Italy. The total MLA for the business is 780,000 sq
ft.
Our experience is that being flexible in its approach has enabled us to
operate from properties and in markets that would have been otherwise
unavailable and to generate strong cash-on-cash returns.
We excel 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% (FY 2023: 89%) of our enquiries in the UK and 86%
(FY 2023: 84%) 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. We have
developed and continue to invest in a leading digital marketing platform that
has generated 39% enquiry growth over the last five years.
Although mostly generated online, our enquiries are predominantly handled
directly by the stores and, in the UK, we have a Customer Support Centre
("CSC") which handles customer service issues in addition to enquiries, in
particular when the store colleagues are busy handling calls or outside of
normal store opening hours.
Our pricing platform provides the store and CSC colleagues with
system-generated real-time prices managed by our centrally based
yield-management team. Local colleagues have certain levels of discretion to
flex the system-generated prices, but this is continually monitored.
Customer service standards are high and customer satisfaction feedback is
consistently very positive. 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. Within our business
customer category, our National Accounts business represents around 493,000 sq
ft of occupied space (around 11% of the UK's occupancy). Approximately 71% of
the space occupied by National Accounts customers is outside London,
demonstrating the importance and quality of our well invested national estate.
At the year end, business customers constitute 41% of our total space let in
the UK. We are accelerating the conversion of larger units (over 250 sq ft)
into smaller ones more suitable for domestic customers, reducing the historic
over-weight towards business customers in the UK. Through this partitioning
programme we expect to significantly reduce the current 1.0 million sq ft of
larger units, which are predominantly located in London (36%) and south east
England (24%), so that the UK ratio of domestic to business customers comes
closer to the 70/30 split by occupied space seen in the rest of the Group.
The business now has in excess of 94,000 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 with regard to changes in
occupancy. Each store typically employs three staff. Our Group Head Office
comprises business support functions such as Yield Management, Property,
Marketing, HR, IT and Finance.
Trading performance
Trading Data - Total
Revenue (millions) Q4 2024 Q4 2023 Change(9) FY 2024 FY 2023 Change
Group (GBP) £57.9 £57.6 0.5% £223.4 £224.2 (0.3%)
UK (GBP) £41.8 £42.6 (1.9%) £162.2 £166.2 (2.4%)
Paris (EUR) €13.2 €13.0 1.6% €51.3 €50.5 1.5%
Expansion Markets (EUR) €6.0 €4.4 35.2% €20.6 €16.0 29.0%
Average Rate (per sq ft) Q4 2024 Q4 2023 Change FY 2024 FY 2023 Change
Group (GBP) £29.64 £30.22 (1.9%) £29.85 £30.26 (1.4%)
UK (GBP) £29.64 £30.26 (2.0%) £29.94 £30.25 (1.0%)
Paris (EUR) €43.17 €42.28 2.1% €42.28 €42.05 0.5%
Expansion Markets (EUR) €23.87 €22.42 6.5% €23.28 €22.02 5.7%
REVPAF (per sq ft) Q4 2024 Q4 2023 Change FY 2024 FY 2023 Change
Group (GBP) £26.81 £28.24 (5.1%) £26.69 £27.70 (3.6%)
UK (GBP) £28.53 £29.58 (3.5%) £28.00 £29.07 (3.7%)
Paris (EUR) €36.93 €37.84 (2.4%) €37.12 €37.10 0.1%
Expansion Markets (EUR) €18.42 €17.52 5.2% €17.63 €17.89 (1.4%)
Closing Occupancy (million sq ft) FY 2024 FY 2023 Change
Group 6.41 6.23 2.9%
UK 4.54 4.47 1.6%
Paris 1.09 1.11 (1.8%)
Expansion Markets 0.78 0.65 20.0%
Closing Occupancy (% of MLA) FY 2024 FY 2023 Change
Group 74.6% 77.0% (2.4ppt)
UK 77.2% 78.1% (0.9ppt)
Paris 76.8% 81.3% (4.5ppt)
Expansion Markets 60.3% 65.1% (4.9ppt)
MLA (million sq ft) FY 2024 FY 2023 Change
Group 8.59 8.09 6.2%
UK 5.88 5.73 2.6%
Paris 1.42 1.36 4.4%
Expansion Markets 1.29 1.00 29.0%
Trading Data - Like-For-Like
Revenue (millions) Q4 2024 Q4 2023 Change(9) FY 2024 FY 2023 Change
Group (GBP at CER(1)) £56.3 £55.9 0.7% £219.0 £218.9 0.0%
UK (GBP) £41.2 £41.3 (0.2%) £160.1 £162.0 (1.2%)
Paris (EUR) €13.2 €13.0 1.4% €51.2 €50.5 1.4%
Expansion Markets (EUR) €4.3 €3.9 10.3% €16.6 €14.7 12.9%
Average Rate (per sq ft) Q4 2024 Q4 2023 Change FY 2024 FY 2023 Change
Group (GBP at CER) £30.48 £30.50 (0.1%) £30.51 £30.46 0.2%
UK (GBP) £29.88 £30.30 (1.4%) £30.10 £30.27 (0.6%)
Paris (EUR) €43.34 €42.28 2.5% €42.33 €42.05 0.7%
Expansion Markets (EUR) €25.60 €23.60 8.5% €24.75 €22.98 7.7%
REVPAF (per sq ft) Q4 2024 Q4 2023 Change FY 2024 FY 2023 Change
Group (GBP at CER) £28.94 £28.74 0.7% £28.34 £28.39 (0.2%)
UK (GBP) £28.99 £29.11 (0.4%) £28.36 £28.80 (1.5%)
Paris (EUR) €38.32 €37.84 1.3% €37.59 €37.10 1.3%
Expansion Markets (EUR) €24.01 €21.39 12.2% €22.92 €20.55 11.5%
Closing Occupancy (million sq ft) FY 2024 FY 2023 Change
Group 6.11 6.12 (0.2%)
UK 4.45 4.45 -
Paris 1.09 1.11 (1.8%)
Expansion Markets 0.57 0.56 1.8%
Closing Occupancy (% of MLA) FY 2024 FY 2023 Change
Group 78.8% 79.3% (0.5ppt)
UK 78.6% 79.0% (0.4ppt)
Paris 79.3% 81.3% (2.0ppt)
Expansion Markets 80.1% 78.1% 1.9ppt
MLA (million sq ft) FY 2024 FY 2023 Change
Group 7.75 7.72 0.4%
UK 5.66 5.64 0.4%
Paris 1.37 1.36 0.7%
Expansion Markets 0.72 0.72 0.0%
UK
Our operational performance across the UK, has been resilient in the current
economic environment with revenue down 2.4% year on year, 1.2% on a
like-for-like ("LFL") basis.
This resulted from a broadly stable like-for-like average rental rate of
£30.10 (0.6% down on FY 2023 at £30.27) together with flat LFL occupancy.
This like-for-like occupancy position reflects strengthening domestic demand,
which had a steadily improving trajectory through the second half of FY 2024
to be 4.3% ahead of prior year at 31 October 2024, offset by continued soft
demand from business customers which was 6.0% behind at the year end.
Overall revenue in the UK was impacted by £2.2 million due to changes in the
nature of customer goods protection with cover in FY 2024 not attracting
insurance premium tax ("IPT"). This difference has been excluded from
like-for-like measures to better reflect performance.
In addition, new stores and developments contributed £2.1 million of revenue
in the year.
The LFL cost base in the UK increased by £2.3 million year on year due market
inflationary increases in store employment costs, business rates and
administrative costs which was offset by a £2.2 million reduction in IPT in
costs of sales due to the changes in the nature of customer goods protection.
As a result, underlying EBITDA for the UK business was £99.3 million (FY
2023: £105.9 million), a decrease of £6.6 million or 6.2%.
Paris
In Paris, LFL revenue grew 1.4% on prior year reflecting a robust performance
in challenging market conditions with total revenue growth of 1.5% year on
year.
The growth on prior year was driven by improving rental rates which increased
to €42.33 for the year, an increase of 0.7% on FY 2023 (€42.05) offset by
flat average occupancy for the year, both on a LFL basis.
REVPAF, which we believe is materially ahead of the local competition, grew by
1.3% against prior year.
Underlying EBITDA at €33.8 million, was down by 3.4% against FY 2023 with
cost of sales and administrative costs increasing by €2.0 million.
Expansion Markets
The performance of Spain, the Netherlands and Belgium has been presented
together, reflecting both their combined scale and their common strategic
focus on providing expansion opportunities for the Group.
Overall, they delivered 12.9% LFL revenue growth in FY 2024 with positive
momentum in all three markets. Total revenue, including the benefit of new
stores, increased 29.0% year on year to €20.6 million.
In Spain LFL revenue grew 3.6% year on year, driven by improvement in
occupancy (closing at 78.0% FY 2023: 74.8%) and flat rental rates. In the
Netherlands, LFL revenue growth was 12.2% driven by increased rental rates
with occupancy broadly in line with prior year. LFL revenue in Belgium grew
17.8% year on year through a combination of both increased rental rates and
improved occupancy.
In addition, new stores and expansions contributed an additional €3.4
million in revenue in the year, largely through openings in Spain, taking
total revenue to €20.6 million, a 29.0% increase year on year for the
combined markets.
Underlying EBITDA increased by €3.0 million to €8.7 million as the
increase in revenue was partially offset by an increase in the underlying cost
of sales and administrative expenses of €2.0 million, resulting from
additional costs to support the new stores as well as their dilutive impact
whilst they achieve stabilisation.
Frederic Vecchioli
15 January 2025
Financial Review
Underlying Income Statement
The table below sets out the Group's underlying results of operations for the
twelve months ended 31 October 2024 ("FY 2024") and the twelve months ended
31 October 2023 ("FY 2023"). 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.
2024 2023 Mvmt
£'m £'m %
Revenue 223.4 224.2 (0.3%)
Underlying costs (88.0) (82.0) 7.4%
Underlying EBITDA 135.4 142.2 (4.8%)
Leasehold rent (15.5) (14.9) 4.0%
Underlying EBITDA after leasehold rent 119.9 127.3 (5.8%)
Depreciation (1.5) (1.3) 15.4%
Net underlying finance charges (21.4) (15.9) 34.6%
Underlying profit before tax 97.0 110.1 (12.0%)
Current tax (4.3) (5.1) 15.7%
Adjusted EPRA earnings 92.7 105.0 (11.8%)
Share-based payments charge (0.3) (3.5) (91.4%)
EPRA basic earnings 92.4 101.5 (9.0%)
Average shares in issue (m) 218.3 217.2
Diluted shares (for ADE EPS) (m) 219.2 219.1
Adjusted diluted EPRA EPS (p) 42.3 47.9 (11.7%)
Notes:
1. Adjusted Diluted EPRA EPS is defined in note 2 to the financial
statements.
2. Adjusted EPRA earnings excludes share-based payment charges and,
accordingly, the underlying EBITDA, underlying EBITDA after leasehold costs
and underlying profit before tax measures have been presented excluding
share-based payment charges for consistency.
The table below reconciles statutory profit before tax in the income statement
to underlying profit before tax in the table above.
2024 2023
£'m £'m
Statutory profit before tax 398.6 207.8
Adjusted for
- gain on investment properties and investment properties under construction (301.9) (102.6)
- change in fair value of derivatives - 1.7
- net exchange loss - (0.3)
- share-based payments 0.3 3.5
Underlying profit before tax 97.0 110.1
Management considers the above presentation of earnings to be representative
of the underlying performance of the business.
Underlying EBITDA decreased by 4.8% to £135.4 million (FY 2023: £142.2
million) reflecting a 0.3% decrease in revenue and a 7.4% increase in
underlying costs.
Net underlying finance charges increased from £15.9 million for FY 2023 to
£21.4 million for FY 2024. This principally reflects the increased borrowing
to finance our development programme and higher interest rates.
As a result, underlying profit before tax decreased 12.0% to £97.0 million
(FY 2023: £110.1 million). The increase in statutory profit before tax of
£190.8 million to £398.6 million (FY 2023: £207.8 million) results from the
increased gain on the fair value of investment properties of £199.3 million
to £301.9m (FY 2023: £102.6 million). This increase reflects the increased
value of the Group's store portfolio primarily as a result of a healthy
transactional market with 53bps reduction in exit yields.
Given the Group's REIT status in the UK, tax is not normally payable on rental
income in the UK but is payable on non-UK earnings. The current underlying tax
charge for the year was £4.3 million (FY 2023: £5.1 million).
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 decreased by 5.6p or 11.7% to 42.3 pence (FY 2023: 47.9
pence).
Reconciliation of Underlying EBITDA
The table below reconciles the operating profit included in the consolidated
income statement to underlying EBITDA.
2024 2023
£'m £'m
Statutory operating profit 425.8 230.4
Adjusted for
gain on investment properties and investment properties under construction (301.9) (102.6)
- fair value re-measurement of lease liabilities 9.7 8.8
- variable lease payments - 0.8
- depreciation 1.5 1.3
- share-based payments 0.3 3.5
Underlying EBITDA 135.4 142.2
The main reconciling items between statutory operating profit and underlying
EBITDA are the gain on investment properties of £292.2 million at 31 October
2024 (31 October 2023: £93.8 million), represented by a gain on investment
properties and investment properties under construction of £301.9 million
less fair value re-measurement of lease liabilities of £9.7 million.
Underlying Profit by geographical region
The Group is organised and managed in three operating segments based on
geographical region, with Expansion Markets including our operations in Spain,
the Netherlands and Belgium together with our German joint venture. The table
below details the underlying profitability of each region.
FY 2024 FY 2023
UK Paris Expansion Markets Total (CER) UK Paris Expansion Markets Total (CER)
£'m €'m €'m £'m £'m €'m €'m £'m
Revenue 162.2 51.3 20.6 224.7 166.2 50.5 16.0 224.2
Underlying cost of sales (52.6) (13.7) (9.1) (72.2) (51.1) (12.1) (7.0) (67.8)
Store EBITDA 109.6 37.6 11.5 152.5 115.1 38.4 9.0 156.4
Store EBITDA margin 67.6% 73.3% 55.7% 67.9% 69.3% 76.0% 56.3% 69.8%
LFL Store EBITDA margin 68.0% 73.4% 60.1% 68.8% 70.3% 76.0% 65.8% 71.3%
Underlying administrative expenses (10.3) (3.8) (2.7) (16.2) (9.2) (3.4) (2.8) (14.2)
Underlying EBITDA 99.3 33.8 8.8 136.3 105.9 35.0 6.2 142.2
EBITDA margin 61.2% 65.9% 42.6% 60.7% 63.7% 69.3% 38.8% 63.4%
Leasehold costs (9.3) (6.4) (1.0) (15.6) (8.6) (6.4) (0.8) (14.9)
Underlying EBITDA after leasehold costs 90.0 27.4 7.8 120.7 97.3 28.6 5.4 127.3
EBITDA after leasehold costs margin 55.5% 53.4% 37.7% 53.7% 58.5% 56.6% 33.8% 56.8%
UK Paris Expansion Markets Total UK Paris Expansion Markets Total
£'m £'m £'m £'m £'m £'m £'m £'m
Underlying EBITDA after leasehold costs (CER) 89.9 23.8 7.0 120.7 97.3 24.9 5.1 127.3
Adjustment to actual exchange rate - (0.2) (0.6) (0.8) - - - -
Reported underlying EBITDA after leasehold costs 89.9 23.6 6.4 119.9 97.3 24.9 5.1 127.3
Note: CER is Constant Exchange Rates with Euro denominated results for the
current period translated 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 decreased by £6.6m, or 6.2%, to £99.3 million
(FY 2023: £105.9 million), reflecting a 2.6% reduction in revenue together
with an increase in underlying cost of sales and administrative expenses of
£2.7 million. The Underlying EBITDA margin reduced to 61.2% compared to 63.8%
in FY 2023.
In Paris, underlying EBITDA decreased by €1.2 million to €33.8 million,
reflecting a €0.8 million increase in revenue less an increase in cost of
sales and administrative expenses of €2.0 million. As a result, Underlying
EBITDA margin decreased to 65.9% from 69.3% in FY 2023.
Underlying EBITDA in Expansion Markets increased by €2.6 million or 41.9% to
€8.8 million (FY 2023: €6.2 million) reflecting a €5.0 million increase
in revenue less an increase in cost of sales and administrative expenses of
€2.0 million. As a result, Underlying EBITDA margin increased from 38.4% in
FY 2023 to 42.3% in FY 2024.
Adjusting for an unfavourable exchange rate movement of 2.1% resulting in an
impact of £0.8 million in the current year, Group reported underlying EBITDA
after leasehold rent decreased by 5.8% or £7.4 million to £119.9 million (FY
2023: £127.3 million).
Revenue
Revenue for the Group is primarily derived from the rental of self-storage
space and the sale of ancillary products such as StoreProtect and merchandise
(e.g. packing materials and padlocks).
The split of the Group's revenues by geographical segment is set out below for
FY 2023 and FY 2024.
2024 % of total 2023 % of total % change
UK £'m 162.2 73% 166.2 74% (2.4%)
Paris
Local currency €'m 51.3 50.5 1.5%
Paris in GBP £'m 43.7 19% 43.9 20% (0.5%)
Expansion Markets
Local currency €'m 20.6 16.0 29.0%
Expansion Markets in GBP £'m 17.5 8% 14.2 6% 23.2%
Average exchange rate €:£ 1.173 1.149
Total revenue 223.4 224.2 100% (0.3%)
The Group's reported revenue decreased by 0.3% or £0.8 million during the
year. LFL revenue at CER was flat.
Total revenue in FY 2023 included £2.2 million of Insurance Premium Tax
("IPT") relating to customer goods insurance which was not repeated in FY 2024
due to changes in the nature of the protection for liability for loss and
damage offered to customers storing goods with us. This amount has been
excluded from like-for-like revenue figures to better reflect underlying
performance.
Average rental rates for the Group on a LFL CER basis increased by 0.2% to
£30.51 (FY 2023: £30.46) coupled with a decrease in average occupancy of
0.5ppts to 78.8% (FY 2023: 79.3%).
In the UK, LFL revenue decreased by £1.9 million or 1.2%. This was driven by
a 1.8% decrease in the average occupancy together with a decrease in average
store rate of 0.6%.
In addition, new stores and developments in the UK contributed an additional
£2.1 million of revenue in the year.
In Paris, revenue increased by €0.8 million or 1.5%. There was an increase
in the average rental rate in Paris to €42.28 for the period, an increase of
0.5% on €42.05 in FY 2023.
The performance of Spain, the Netherlands and Belgium has been presented
together as Expansion Markets, reflecting both their combined scale and their
common strategic focus on providing expansion opportunities for the Group.
Overall, they delivered 12.9% LFL revenue growth in FY 2024 with positive
momentum in all three markets. Total revenue, including the benefit of new
stores, increased 29.0% year on year to €20.6 million.
Analysis of Cost Base
On a like-for-like CER basis, adjusting for new stores, total costs increased
by 8.7% from £62.9 million for FY 2023 to £68.3 million for FY 2024.
Cost of sales
2024 2023
£'m £'m
Volume related including bad debt 5.6 3.6
Store employee and related 22.5 21.8
Marketing 8.8 8.3
Business rates 16.2 14.6
Facilities and premises insurance 15.2 14.6
Underlying cost of sales (Like-for-like; CER) 68.3 62.9
New stores and developments 4.0 2.7
Store Protect replacement IPT - 2.2
Foreign exchange (0.1) -
Underlying costs of sales 72.2 67.8
Depreciation 1.5 1.3
Variable lease payments - 0.8
Total costs of sales 73.7 69.9
In order to arrive at underlying cost of sales, adjustments are made to remove
the impact of depreciation and variable lease payments.
Adjusting for the impact of new stores, underlying cost of sales at CER on a
like-for-like basis increased by 8.7% or £5.4 million, to £68.3 million (FY
2023: £62.9 million).
Of this, volume related costs including bad debt, increased £2.0 million,
principally due to higher provisioning in France as a result of changes to
non-payer management processes. Store employee costs increased £0.8 million,
led by £0.9 million higher costs in the UK as a result of increases in the
National Living Wage in April 2024. Business rates were £1.6 million higher
in the year as a result of CPI-linked increases and increased ratable values.
The cost of sales attributable to non-LFL stores added £1.3 million year on
year.
Cost of sales in FY 2023 included £2.2 million of IPT which is not repeated
in FY 2024 due to changes in the nature of the protection for liability for
loss and damage offered to customers storing goods with us.Administrative
Expenses
The table below reconciles reported administrative expenses to underlying
administrative expenses and details the key movements in underlying
administrative expenses between FY 2023 and FY 2024.
2024 2023
£'m £'m
Underlying administrative expenses (Like-for-like; CER) 15.2 13.6
New stores and developments 0.7 0.6
Foreign exchange (0.1) -
Underlying administrative expenses 15.8 14.2
Share based payments 0.3 3.5
Total administrative expenses 16.1 17.7
In order to arrive at underlying administrative expenses, adjustments are made
to remove the impact of exceptional items and share-based payments.
Underlying administrative expenses increased by 11.3% or £1.6 million to
£15.8 million (FY 2023: £14.2 million). The increase primarily arose from a
rise in employee and related costs.
Gain on revaluation of Investment Properties
A full, independent external valuation of the store portfolio is undertaken by
the Group on an annual basis for year-end reporting.
As a result of this exercise, the net gain on investment properties during the
year was as follows.
2024 2023
£'m £'m
Gain on revaluation of investment properties 301.9 103.5
Loss on revaluation of investment properties under construction - (0.9)
Fair value re-measurement of lease liabilities (9.7) (8.8)
Gain on revaluation of investment properties 292.2 93.8
The movement on investment properties reflects the increased value of the
Group's store portfolio primarily as a result of an improvement in cap rates,
reflecting recent market transactions in self-storage. The UK business
contributed £231.7 million of the £292.2 million net revaluation gain, with
a £45.0m revaluation gain arising in Paris and a £25.2 million revaluation
gain arising in Expansion Markets.
Operating profit
Reported operating profit increased by £195.4 million from £230.4 million
for FY 2023 to £425.8 million for FY 2024, primarily reflecting an increase
in the investment property gain offset by a £6.8 million reduction in
underlying EBITDA.
Net finance costs
Net finance costs include interest payable, interest on obligations under
lease labilities, fair value movements on derivatives, exchange gains or
losses, unwinding of discounts and exceptional finance income. Net finance
costs increased by £4.6 million to £27.2 million in FY 2024 (FY 2023: £22.6
million). The main driver of the increase was net bank interest payable
reflecting the Group's additional borrowings to fund the Group's acquisition
and development activity, higher interest rates on floating-rate borrowings
and a positive variance to prior year fair value movements on derivatives.
2024 2023
£'m £'m
Net exchange gains - 0.3
Other interest received 0.1 0.1
Financial instruments income - 0.4
Total finance income 0.1 0.8
Net bank interest payable (27.7) (19.5)
Capitalised interest on developments 7.8 4.4
Amortisation of debt issuance costs on bank loans (1.6) (1.3)
Underlying finance costs (21.5) (16.4)
Interest on lease liabilities (5.8) (5.3)
Fair value movement on derivatives - (1.7)
Total finance costs (27.3) (23.4)
Net finance costs (27.2) (22.6)
The underlying finance costs represent the finance expense before interest on
obligations under lease liabilities, changes in fair value of derivatives and
exceptional items and is disclosed because management reviews and monitors
performance of the business on this basis.
The underlying finance costs (reflecting revolving credit facility ("RCF") and
US Private Placement ("USPP") interest costs and the amortisation of
capitalised debt issuance costs) increased by £5.1 million to £21.5 million
(FY 2024: £16.4 million).
Net interest on borrowings increased £8.5 million year on year due to on
higher average borrowings from financing our development programme and
increased interest rates on our floating-rate RCF. Partially offsetting this
was a £3.4 million increase in interest capitalised on store developments.
The movement in underlying finance costs can be summarised as follows:
Non-underlying finance charge
Interest on finance leases was £5.8 million (FY 2024: £5.3 million) and
reflects part of the leasehold rental payment. The balance of the leasehold
payment is charged through the gain or loss on investment properties line and
variable lease payments in the income statement. Overall, the leasehold rent
charge increased by £0.6 million to £15.5 million in FY 2024 (FY 2023:
£14.9 million). In the prior year, a net loss of £1.7 million was recognised
on fair valuation of derivatives when they matured.
The Group undertakes net investment hedge accounting for its Euro denominated
loan notes reflecting the natural currency hedge against Euro denominated
assets.
Tax
The tax charge for the period is analysed below:
Tax charge 2024 2023
£'m £'m
Underlying current tax losses (4.3) (5.1)
Current tax charge (4.3) (5.1)
Tax on investment properties movement (21.7) (8.3)
Adjustment in respect of prior years 1.3 2.8
Losses in respect of current year (1.6) 3.0
Deferred tax charge (22.0) (2.5)
Net tax charge (26.3) (7.6)
Income tax in the period was a net charge of £26.3 million (FY 2023: £7.6
million).
In the UK, the Group is a REIT, so the current tax charge relates to the Paris
and Spain businesses. The underlying current tax charge for the period
amounted to £4.3 million (FY 2023: £5.1m).
Profit after tax
The profit after tax for the period was £372.3 million, compared with £200.2
million in FY 2023, an increase of £172.1m which arose principally due to the
increased gain on investment properties, which is explained above.
Earnings per Share
Basic EPS was 170.5 pence (FY 2023: 92.2 pence) and diluted EPS was 170.1
pence (FY 2023: 91.8 pence). As explained in note 2 to the financial
statements, management considers adjusted diluted EPRA EPS to be more
representative of the underlying EPS performance of the business
Adjusted Diluted EPRA EPS is based on the European Public Real Estate
Association's ("EPRA") definition of earnings and is defined as profit or loss
for the period after tax excluding corporate transaction costs, changes in
fair value of derivatives, gain/loss on the fair value of 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 figure 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 from such schemes is the dilution that they
will experience on the granting of shares. Therefore, earnings has been
adjusted for the IFRS 2 share-based payment charge and the number of shares
used in the EPS calculation has also been adjusted for the dilutive effect of
the LTIP schemes.
Adjusted Diluted EPRA EPS for the year was 42.3 pence (FY2023: 47.9 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:
The Group has exposure to the movement in the Euro/GBP exchange rate. Based on
the FY 2024 results, for a 10 cent increase to the average exchange rate of
1.173 would cause an impact of £1.7 million to Adjusted EPRA Earnings (FY
2023: £1.3 million).
2024 2023
Earnings Shares Pence Earnings Shares Pence
£'m million per share £'m million per share
Basic earnings 372.3 218.3 170.5 200.2 92.2
217.2
Adjustments:
Gain on investment properties (292.2) (133.9) (93.8) - (43.2)
Net exchange loss (0.3) - (0.1)
Change in fair value of derivatives 1.7 - 0.8
Tax on adjustments/exceptional tax 20.9 9.6 1.4 - 0.6
Adjusted 101.0 218.3 46.2 109.2 217.2 50.3
EPRA adjusted:
Fair value re-measurement of lease liabilities add-back (9.7) - (4.5) (8.8) - (4.1)
Tax on lease liabilities add-back adjustment 1.1 - 0.5 1.1 - 0.5
EPRA basic EPS 92.4 218.3 42.2 101.5 217.2 46.7
Share-based payments charge 0.3 - 0.1 3.5 - 1.6
Dilutive shares 0.9 - - 1.9 (0.4)
Adjusted Diluted EPRA EPS 92.7 219.2 42.3 105.0 219.1 47.9
Investment Properties
Cushman & Wakefield Debenham Tie Leung Limited LLP ("C&W") has valued
the Group's property portfolio. As at 31 October 2024, the total value of the
Group's property portfolio of open stores was £3,052.9 million (31 October
2023: £2,681.1 million).
UK Paris Expansion Markets Total IP Paris Expansion Markets
£'m £'m £'m £'m €'m €'m
Value of IP as at 1 November 2023 1,872.2 573.9 235.0 2,681.1 657.9 269.4
Developments and Acquisitions 40.5 30.9 30.6 102.0 36.3 35.9
Disposals - - - - - -
Revaluation 231.7 45.0 25.2 301.9 52.8 29.5
FX (22.7) (9.6) (32.3)
Value of IP as at 31 October 2024 2,144.4 627.1 281.3 3,052.8 747.0 334.8
IP Under Construction 75.8 22.2 32.7 130.7 26.4 38.8
IP and IPUC 2,220.2 649.3 314.0 3,183.5 773.4 373.6
IP Lease Liabilities 73.1 19.1 8.4 100.6 22.7 10.1
Total as at 31 October 2024 2,293.3 668.4 322.4 3,284.1 796.1 383.7
Property Valuation £m (including Investment Properties under construction),
before lease liabilities
The above tables summarise the movement in the valuations of the Group's
investment property portfolio including investment properties under
construction.
The Group's property portfolio valuation, including investment properties
under construction, increased by £393.9 million, which includes the gain on
valuation of £301.9 million and £125.9 million relating to additions and
store refurbishments and foreign currency movements.
The exchange rate at 31 Oct 2024 was €1.191:£1 compared to €1.146:£1 at
31 October 2023. This movement in the foreign exchange rate has resulted in a
£34.0m unfavourable currency translation movement in the value of our
investment properties in the year.
Valuation movement as a result of yield compression reflecting investor
confidence in the sector with average freehold exit yield reducing 53bps to
5.19% in the year (FY 2023: 5.72%), partially offset by discount rates for
future cash flows increasing 12bps to 8.66% in the year (FY 2023: 8.54%).
The EPRA basic NTA per share, as reconciled to IFRS net assets per share in
financial statements, was 1,091 pence at 31 October 2024, up 14.6% since 31
October 2023 (952 pence), and the IFRS reported diluted NAV per share was
1,017 pence (FY 2023: 884 pence), reflecting the £307.8 million growth in
reported net assets since 31 October 2023.Gearing, and Capital Structure
The Group finances its activities through a combination of equity and
borrowings. As at 31 October 2024, the Group's borrowings comprise bank
borrowing facilities, made up of a Revolving Credit Facility "RCF", together
with US Private Placement notes "USPPs".
The drawn debt position as at 31 October 2024 is analysed as follows:
Facility Fixed-rate borrowings Floating-rate borrowings Total rate
£/€'m £'m £'m
RCF - GBP drawn £500.0 £249.0 6.15%
RCF - EUR drawn £106.7 4.57%
RCF - non-utilisation £144.3 0.42%
USPP 2026 €70.0 £58.7 1.26%
USPP 2026 £35.0 £35.0 2.59%
USPP 2027 €74.1 £62.1 2.00%
USPP 2028 £20.0 £20.0 1.96%
USPP 2028 €29.0 £24.4 0.93%
USPP 2029 £50.5 £50.5 2.92%
USPP 2029 £30.0 £30.0 2.69%
USPP 2029 €105.0 £88.1 2.45%
USPP 2031 £80.0 £80.0 2.39%
USPP 2033 €29.0 £24.4 1.42%
Unamortised finance costs - (£4.8) -
Total 973.2 612.7 355.7 3.96%
The debt repayment schedule can be summarised as follows ('£m)
During the year, the Group exercised an accordion option to increase the
committed facility in the RCF by £100.0 million to £500.0 million. The
facility was originally for a four-year term with two one-year extension
options exercisable after the first and second years of the agreement. The
first of these extensions was exercised in FY 2023. The Group exercised the
second one-year extension in FY 2024 with the RCF now to expiring in November
2028.
As at 31 October 2024, £355.7 million of the £500.0 million RCF was drawn,
split £249.0 million and €127 million (£106.7 million).
The Group pays interest on the RCF at an initial margin of 125bps plus SONIA
or Euribor. The margin payable is linked to certain ESG targets, which have
been met, enabling a reduction in the margin by 5bps to 120bps. In addition,
the Group pays a non-utilisation fee of 0.42% on the undrawn facility balance.
USPPs are denominated in Euros and Sterling and incur fixed rates of interest.
The 2026, 2027, 2028, 2029 and 2033 USPP Notes are denominated in Euros and
have interest rates of 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 2026 (£35.0 million), 2028 (£20.0 million), 2029 (£50.5 million), 2029
(£30.0 million) and 2031 (£80.0 million) USPP Notes are denominated in
Sterling and have interest rates of 2.59%, 1.96%, 2.92%, 2.69% and 2.39%
respectively.
In the year, a €51.0 million USPP matured at the end of May 2024 and was
fully repaid utilising existing facilities. Following the year end, a new USPP
of €70.0 million was issued in December 2024 with a maturity in December
2032 and a fixed rate of interest of 4.03%.
As at 31 October 2024, 57% of the Group's drawn debt is at fixed rates of
interest. Overall, the Group has an effective interest rate on its borrowings
of 3.96% as at 31 October 2024, compared with 3.58% at the previous year end.
The Euro denominated borrowings provide a natural hedge against the Group's
investment in the Paris and Expansion Markets businesses.
Net debt (including finance leases and cash) stood at £899.5 million at 31
October 2024, an increase of £89.2 million during the year, principally due
to increased funding required for store acquisitions and developments.
Total capital (net debt plus equity) increased from £2,745.4m at 31 October
2023 to £3,126.3 million at 31 October 2024. The net impact is that the
gearing ratio has decreased to 28.8% at 31 October 2024 from 29.5% at 31
October 2023.
Management also measures leverage 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 (excluding finance leases), including
investment properties under construction. As at 31 October 2024, the Group LTV
ratio was 25.1% compared with 25.4% at 31 October 2023.
The Board considers the current level of gearing is appropriate for the
business to enable the Group to increase returns on equity, maintain financial
flexibility and to achieve our medium-term strategic objectives.
As at 31 October 2024, £355.7 million of the £500.0 million UK revolver was
drawn. Including the USPP debt of €307.1 million (£257.8 million) and
£215.5 million, the Group's borrowings totalled £829.0 million (before
adjustment for unamortised finance costs). As at 31 October 2024, the weighted
average remaining term for the Group's committed borrowing facilities is 4.2
years.
Following the repayment of the 2024 USPP, the Group has no other maturities
until 2026 and has a weighted average term to maturity of 4.2 years.
Borrowings under the existing loan facilities are subject to certain financial
covenants. The RCF and the USPPs share interest cover and LTV covenants. The
interest cover requirement of a minimum of EBITDA interest of 2.4:1. Interest
cover for FY 2024 was 4.3x (FY 2023: 6.7x), calculated on the basis required
under our financial covenants.
The LTV covenant is 60% for the Group. As at 31 October 2024, there is
significant headroom in the Group LTV covenant calculations.
Going Concern
The Group is in compliance with its covenants at 31 October 2024 and, based on
forecast projections (which considered a number of factors, including the
current balance sheet position, the principal and emerging risks which could
impact the performance of the Group, and the Group's strategic and financial
plan), is expected to be in compliance and have ample liquidity for a period
in excess of twelve months from the date of this report and accordingly, this
year end statement is prepared on the basis of going concern.
Cash flow
The table below sets out the cash flow of the business in FY 2024 and FY 2023.
2024 2023
£'m £'m
Underlying EBITDA 135.4 142.2
Working capital/ exceptionals/ other (2.3) (13.0)
Adjusted operating cash inflow 133.1 129.2
Interest payments (25.3) (19.6)
Leasehold payments (15.5) (14.9)
Tax payments (6.1) (5.5)
Free cash flow (before investing and financing activities) 86.2 89.2
Investment in associates (2.5) (2.3)
Capital expenditure - investment properties (118.3) (119.0)
Capital expenditure - property, plant and equipment (1.8) (2.9)
Adjusted net cash flow after investing activities (36.4) (35.0)
Issues of share capital 0.7 0.2
Dividends paid (65.9) (65.9)
Net drawdown of borrowings 111.6 101.3
Financial instruments - 0.4
Debt issuance costs (1.3) (4.9)
Net (decrease) in cash 8.7 (3.9)
Note: Free cash flow is a non-GAAP measure, defined as cash flow before
investing and financing activities but after leasehold rent payments.
Adjusted operating cash flow increased by £4.2m in the year.
Interest payments increased compared to the prior year as a result of the
increased interest charge associated with the additional borrowings to fund
the capital expenditure on new stores. With small increases in Leasehold and
Tax payments, Free Cash Flow was broadly stable year on year at £86.2 million
(FY 2023: £89.2 million).
In the year, we invested £122.6 million (FY 2023: net outflow of £124.2
million) on capital expenditure, principally on the development of new stores.
Dividends paid to shareholders were £65.9 million FY 2024 (£65.9 million FY
2023), and the Group drew a net £111.6 million of borrowings, primarily to
finance capital expenditure.
The first table below reconciles free cash flow (before investing and
financing activities) in the table above to net cash inflow from operating
activities in the consolidated cash flow statement. The second table below
reconciles adjusted net cash flow after investing activities in the table
above to the consolidated cash flow statement.
2024 2023
£'m £'m
Free cash flow (before investing and financing activities) 86.2 89.2
Addback: Finance lease principal payments 9.7 8.8
Net cash inflow from operating activities 95.9 98.0
2024 2023
£'m £'m
From table above:
Adjusted net cash flow after investing activities (36.4) (35.0)
Addback: Finance lease principal payments 9.7 8.8
Net cash outflow after investing activities (26.7) (26.2)
From consolidated cash flow:
Net cash inflow from operating activities 95.9 98.0
Net cash outflow from investing activities (122.6) (124.2)
Net cash outflow after investing activities (26.7) (26.2)
Dividends
The Directors are recommending a final dividend of 20.4 pence per share (FY
2023: 20.2 pence per share) which Shareholders will be asked to approve at the
Company's Annual General Meeting on 19 March 2025. If approved by
Shareholders, the final dividend will be payable on 15 April 2025 to
Shareholders on the register at close of business on 19 March 2025. Reflective
of the continued strong cash generation and positive outlook for the Group's
long term prospects, the Group's full year dividend of 30.40 pence per share
is 1.0% up on the prior year dividend of 30.10 pence per share. The Property
Income Distribution ("PID") element of the full year dividend is 17.60 pence
per share (FY2023: 17.62 pence per share).
Consolidated income statement
for the year ended 31 October 2024
Group
Notes 2024 2023
£'m £'m
Revenue 2, 3 223.4 224.2
Cost of sales (73.7) (69.9)
Gross profit 149.7 154.3
Administrative expenses (16.1) (17.7)
Operating profit before gains on investment properties 133.6 136.6
Gain on revaluation of investment properties 9 292.2 93.8
Operating profit 3 425.8 230.4
Finance income 4 0.1 0.8
Finance expense 4 (27.3) (23.4)
Profit before income tax 398.6 207.8
Income tax charge 5 (26.3) (7.6)
Profit for the year 372.3 200.2
Earnings per share for profit attributable to the equity holders 7 170.5 92.2
- basic (pence)
- diluted (pence) 7 170.1 91.8
The financial results for both years relate to continuing operations.
Consolidated statement of comprehensive income
for the year ended 31 October 2024
Group
2024 2023
£'m £'m
Profit for the year 372.3 200.2
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (22.0) 7.1
Net investment hedge 6.9 (2.9)
Other comprehensive income, net of tax (15.1) 4.2
Total comprehensive income for the year 357.2 204.4
Consolidated balance sheet
as at 31 October 2024
Group
Notes 2024 2023
£'m £'m
Assets
Non-current assets
Investment in associates 8 6.6 4.1
Investment properties 9 3,284.1 2,890.9
Property, plant and equipment 5.7 5.2
Deferred tax assets 6.3 6.6
3,302.7 2,906.8
Current assets
Inventories 0.4 0.4
Current income tax receivables 1.0 -
Trade and other receivables 31.7 32.8
Cash and cash equivalents 11,17 25.3 16.9
58.4 50.1
Total assets 3,361.1 2,956.9
Current liabilities
Bank borrowings 12,17 - (44.5)
Trade and other payables (51.8) (52.4)
Current income tax liabilities - (0.4)
Lease liabilities 14 (14.0) (13.1)
(65.8) (110.4)
Non-current liabilities
Bank borrowings 12, 17 (824.2) (681.3)
Deferred tax liabilities (155.4) (139.2)
Lease liabilities 14 (86.6) (88.3)
Provisions 18 (2.3) (2.6)
(1,068.5) (911.4)
Total liabilities (1,134.3) (1,021.8)
Net assets 2,226.8 1,935.1
Equity
Ordinary share capital 15 2.2 2.2
Share premium 62.7 62.0
Translation reserve (2.4) 12.7
Retained earnings 2,164.3 1,858.2
Total equity 2,226.8 1,935.1
These financial statements were authorised for issue by the Board of Directors
on 15 January 2025 and signed on its behalf by:
S
Clinton
F Vecchioli
Chief Financial Officer Chief
Executive Officer
Company registration number: 04726380
Consolidated statement of changes in shareholders' equity
for the year ended 31 October 2024
Group
Share Share Translation Retained Total
capital premium reserve earnings £'m
£'m £'m £'m £'m
Balance at 1 November 2022 2.1 61.8 8.5 1,721.0 1,793.4
Comprehensive income
Profit for the year - - - 200.2 200.2
Other comprehensive income
Currency translation differences - - 7.1 - 7.1
Net investment hedge - - (2.9) - (2.9)
Total other comprehensive income - - 4.2 - 4.2
Total comprehensive income - - 4.2 200.2 204.4
Transactions with owners
Dividends (note 6) - - - (65.9) (65.9)
Increase in share capital and share premium 0.1 0.2 - - 0.3
Employee share options - - - 2.9 2.9
Transactions with owners 0.1 0.2 - (63.0) (62.7)
Balance at 1 November 2023 2.2 62.0 12.7 1,858.2 1,935.1
Comprehensive income
Profit for the year - - - 372.3 372.3
Other comprehensive income
Currency translation differences - - (22.0) - (22.0)
Net investment hedge - - 6.9 - 6.9
Total other comprehensive income - - (15.1) - (15.1)
Total comprehensive income - - (15.1) 372.3 357.2
Transactions with owners
Dividends (note 6) - - - (65.9) (65.9)
Increase in share capital and share premium - 0.7 - - 0.7
Employee share options - - - (0.3) (0.3)
Transactions with owners - 0.7 - (66.2) (65.5)
Balance at 31 October 2024 2.2 62.7 (2.4) 2,164.3 2,226.8
The translation reserve balance of (£2.4) million (FY 2023: £12.7 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 income of £4.1 million (FY 2023: loss of £2.8
million).
Consolidated cash flow statement
for the year ended 31 October 2024
Group
Notes 2024 2023
£'m £'m
Cash flows from operating activities
Cash generated from operations 16 133.1 128.4
Interest received 0.1 -
Interest paid (31.2) (24.9)
Tax paid (6.1) (5.5)
Net cash inflow from operating activities 95.9 98.0
Cash flows from investing activities
Investment in associates 8 (2.5) (2.3)
Expenditure on investment properties (118.3) (119.0)
Purchase of property, plant and equipment (1.8) (2.9)
Net cash outflow from investing activities (122.6) (124.2)
Cash flows from financing activities
Issue of share capital 0.7 0.2
Equity dividends paid 6 (65.9) (65.9)
Proceeds from borrowings 173.8 108.4
Repayment of borrowings (62.2) (7.1)
Financial instruments income - 0.4
Debt issuance costs (1.3) (4.9)
Principal payment of lease liabilities (9.7) (8.8)
Net cash inflow from financing activities 35.4 22.3
Net increase/(decrease) in cash and cash equivalents 8.7 (3.9)
Exchange loss on cash and cash equivalents (0.3) (0.1)
Cash and cash equivalents at 1 November 16.9 20.9
Cash and cash equivalents at 31 October 11,17 25.3 16.9
Notes to the financial statements
for the year ended 31 October 2024
The Board approved this preliminary announcement on 15 January 2025.
The financial information included in this preliminary announcement does not
constitute the Group's statutory accounts for the years ended 31 October 2024
or 31 October 2023. Statutory accounts for the year ended 31 October 2023 have
been delivered to the Registrar of Companies. The statutory accounts for the
year ended 31 October 2024 will be delivered to the Registrar of Companies
following the Company's annual general meeting.
The auditor has reported on the 2024 and 2023 statutory accounts; their report
was unqualified, did not include any references to any matters by way of
emphasis and did not contain statements under section 498 (2) or (3) of the
Companies Act 2006.
These financial statements for the year ended 31 October 2024 have been
prepared under the historical cost convention except for the following assets
and liabilities, which are stated at their fair value: investment property,
derivative financial instruments and financial interest in property assets.
The accounting policies used are consistent with those contained in the
Group's last annual report and accounts for the year ended 31 October 2023,
except for items as described below. All amounts are presented in Sterling and
are rounded to the nearest £0.1 million, unless otherwise stated.
The financial information included in this preliminary announcement has been
prepared in accordance with United Kingdom adopted International Financial
Reporting Standards ("IFRS"), International Financial Reporting
Interpretations Committee ("IFRIC") interpretations and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
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 2024, 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 financial plans, in particular the
projections for the period to 30 April 2026, approved by the Board. In the
context of the current environment, plausible downside scenarios were applied
to the plan, including a reverse stress test scenario. These scenarios are
differentiated by the impact of lower demand levels, lower average rate growth
and what level of cost savings is reasonable. 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. The impact of the downside
scenarios has been reviewed against the Group's projected cash flow position
and financial covenants over a three-year period. Should any of these
scenarios occur, clear mitigating actions are available to ensure that the
Group remains liquid and 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.
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 2024:
• Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1)
• Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
• Non-current Liabilities with Covenants (Amendments to IAS 1)
• Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
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.
Critical accounting judgements and key sources of estimation uncertainty
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 has 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 12 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 of
this announcement.
• 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 10.
• 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 14.
• 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.
Forward-looking statements
Certain statements in this preliminary announcement are forward-looking.
Although the Group believes that the expectations reflected in these
forward-looking statements are reasonable, we can give no assurance that these
expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual results may
differ materially from those expressed or implied by these forward-looking
statements. We undertake no obligation to update any forward-looking
statements whether as a result of new information, future events or otherwise.
2. Revenue
Analysis of the Group's operating revenue can be found below:
2024 2023
£'m £'m
Self-storage income 186.6 187.2
Customer goods protection Income 25.1 25.5
Other non-storage income 11.7 11.5
Total revenue 223.4 224.2
3. Segmental analysis
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 three operating segments, based on
geographical areas, being the United Kingdom, Paris in France and Expansion
Markets (Spain, the Netherlands and Belgium). This change has been made from
the prior periods to reflect the importance of these three markets in driving
growth for the Group.
The chief operating decision maker, being the Executive Directors, 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.
Year ended 31 October 2024 UK Paris Expansion Markets Group
£'m £'m £'m £'m
Continuing operations
Revenue 162.2 43.7 17.5 223.4
Underlying EBITDA 99.3 28.7 7.4 135.4
Share-based payments (0.1) (0.1) (0.1) (0.3)
Variable lease payments and depreciation (1.4) (0.1) - (1.5)
Operating profit before gain on revaluation of investment properties and other 97.8 28.5 7.3 133.6
exceptional gains
Gain on investment properties 226.8 40.9 24.5 292.2
Operating profit 324.6 69.4 31.8 425.8
Net finance expense (17.2) (1.3) (8.7) (27.2)
Profit before tax 307.4 68.1 23.1 398.6
Total investment properties 2,293.2 668.6 322.3 3,284.1
Year ended 31 October 2023 re-presented UK Paris Expansion Markets Group
£'m £'m £'m £'m
Continuing operations
Revenue 166.2 43.9 14.1 224.2
Underlying EBITDA 105.9 30.5 5.8 142.2
Share-based payments (3.1) (0.3) (0.1) (3.5)
Variable lease payments and depreciation (1.9) (0.2) - (2.1)
Operating profit before gain on revaluation of investment properties and other 100.9 30.0 5.7 136.6
exceptional gains
Gain on investment properties 70.9 16.3 6.6 93.8
Operating profit 171.8 46.3 12.3 230.4
Net finance expense (13.8) (2.2) (6.6) (22.6)
Profit before tax 158.0 44.1 5.7 207.8
Total investment properties 2,002.2 612.7 276.0 2,890.9
Results for the UK segment for FY 2023 have been re-presented with the
inclusion of transactions between the Group and the German associate being
included in Expansion Markets. The impact is to lower Revenue by £0.3
million, Profit before tax by £0.3 million and Total assets by £0.3 million
within the UK segment and increase it by the same amounts in the Expansion
Markets segment.
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.
4. Finance income and costs
2024 2023
£'m £'m
Finance income
Other interest and similar income 0.1 0.1
Financial instruments income - 0.4
Underlying finance income 0.1 0.5
Net exchange gains - 0.3
Total finance income 0.1 0.8
Finance costs
Interest payable on borrowings (19.9) (15.1)
Amortisation of debt issuance costs on bank loan (1.5) (1.3)
Underlying finance charges (21.5) (16.4)
Interest on lease liabilities (5.7) (5.3)
Fair value loss on derivatives - (1.7)
Net exchange losses - -
Total finance costs (27.3) (23.4)
Net finance costs (27.2) (22.6)
The total change in fair value of derivatives reported within net finance
costs for the year is £nil (FY 2023: £1.7 million net loss). Included within
2023 finance income is £0.4 million relating to swaps settled in June 2023.
5. Income tax charge
Analysis of tax charge in the year:
Note 2024 2023
£'m £'m
Current tax:
- current year 4.3 5.1
- prior year - -
4.3 5.1
Deferred tax:
- current year 21.7 5.3
- prior year 0.3 (2.8)
22.0 2.5
Tax charge 26.3 7.6
Reconciliation of income tax charge
The tax for the period is lower (FY 2023: lower) than the standard rate of
corporation tax in the UK for the year ended 31 October 2024 of 25% (FY 2023:
22.5%). The differences are explained below:
2024 2023
£'m £'m
Profit before tax 398.6 207.8
Profit before tax multiplied by the standard rate of corporation tax in the UK 99.7 46.8
of 25% (FY 2023: 22.5%)
Effect of:
- permanent differences 1.5 (6.3)
- profits from the tax exempt business (78.2) (32.4)
- deferred tax arising on acquisition of overseas subsidiary - -
- difference from overseas tax rates 1.5 0.9
- potential deferred tax assets not recognised 1.7 1.4
- prior year adjustment 0.1 (2.8)
Tax charge 26.3 7.6
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.
Taxation for other jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
6. Dividends per share
Dividends paid in 2024 were £65.9 million (30.2 pence per share) (FY 2023:
£65.9 million (30.30 pence per share)). A final dividend in respect of the
year ended 31 October 2024 of 20.4 pence (FY 2023: 20.20 pence) per share,
amounting to a total final dividend of £44.6 million (FY 2023: £44.1
million), is to be proposed at the AGM on 19 March 2025. The ex-dividend date
will be 13 March 2025 and the record date will be 14 March 2025 with an
intended payment date of 15 April 2025. The final dividend has not been
included as a liability at 31 October 2024.
The Property Income Distribution ("PID") element of the final dividend is 15.3
pence (FY 2023: 15.15 pence), making the PID payable for the year 17.60 pence
(FY 2023: 17.62 pence) per share.
7. 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.
Year ended 31 October 2024 Year ended 31 October 2023
Earnings Shares Pence Earnings Shares Pence
£'m million per share £'m million per share
Basic 372.3 218.3 170.5 200.2 217.2 92.2
Dilutive securities - 0.6 (0.4) - 0.9 (0.4)
Diluted 372.3 218.9 170.1 200.2 218.1 91.8
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. 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,
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.
Year ended 31 October 2024 Year ended 31 October 2023
Earnings Shares Pence Earnings Shares Pence
£'m million per share £'m million per share
Basic 372.3 218.3 170.5 200.2 217.2 92.2
Adjustments:
Gain on revaluation of investment properties (292.2) - (133.9) (93.8) - (43.2)
Fair value re-measurement of investment properties lease liabilities (9.7) - (4.5) (8.8) - (4.1)
Net exchange gain - - - (0.3) - (0.1)
Change in fair value of derivatives - - - 1.7 - 0.8
Tax on adjustments 22.0 - 10.1 2.5 - 1.1
Adjusted EPRA basic EPS 92.4 218.3 42.2 101.5 217.2 46.7
Share-based payments charge 0.3 - 0.1 3.5 1.6
Dilutive shares - 0.9 - - 1.9 (0.4)
Adjusted Diluted EPRA EPS1 92.7 219.2 42.3 105.0 219.1 47.9
Note:
1 Adjusted Diluted EPRA EPS is based on the European Public Real
Estate Association's definition of earnings and is defined as profit or loss
for the period after tax but excluding corporate transaction costs, change in
fair value of derivatives, gain/loss on investment properties and the
associated tax impacts. The Company then makes further adjustments for the
impact of exceptional items, IFRS 2 share based payment charges, exceptional
tax items, and deferred tax charges. This adjusted earnings is divided by the
diluted number of shares. The IFRS 2 cost is excluded as it is written back to
distributable reserves and is a non-cash item (with the exception of the
associated National Insurance element). Therefore neither the company's
ability to distribute nor pay dividends are impacted (with the exception of
the associated National Insurance element). The financial statements disclose
earnings both 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.
Gain on revaluation of investment properties includes the fair value
re-measurement of investment properties lease liabilities of £9.7 million (FY
2023: £8.8 million) and the related tax thereon of £1.1 million (FY 2023:
£1.1 million). As an industry standard measure, EPRA earnings is presented.
EPRA earnings of £92.4 million (FY 2023: £101.5 million) and EPRA Earnings
per Share of 42.2 pence (FY 2023: 46.7 pence) are calculated after further
adjusting for these items.
EPRA adjusted income statement (non-statutory) 2024 2023 Movement
£'m £'m %
Revenue 223.4 224.2 (0.3%)
Underlying operating expenses (excluding depreciation and variable lease (88.0) (82.0) 7.4%
payments)
Share of associate's Underlying EBITDA - - -
Underlying EBITDA before variable lease payments 135.4 142.2 (4.8%)
Share-based payments charge (0.3) (3.5) (91.4%)
Depreciation and variable lease payments (1.5) (2.1) (28.6%)
Operating profit before fair value re-measurement of investment properties 133.6 136.6 (2.2%)
lease liabilities
Fair value re-measurement of investment properties lease liabilities (9.7) (8.8) 10.2%
Operating profit 123.9 127.8 (3.1%)
Net financing costs (27.2) (21.2) 28.3%
Profit before income tax 96.7 106.6 (9.4%)
Income tax (4.3) (5.1) (15.7%)
Profit for the year ("Adjusted EPRA basic earnings") 92.4 101.5 (9.0%)
Adjusted EPRA basic EPS 42.2 pence 46.7 pence (9.6%)
Final dividend per share 20.4 pence 20.2 pence 1.0%
Underlying EBITDA of £135.4 million (FY 2023: £142.2 million) 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.
8. Investment in associates
2024 2023
£'m £'m
PBC Les Groues SAS 1.8 1.8
CERF II German Storage Topco S.a.r.l. 4.8 2.3
6.6 4.1
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 2023: £nil). The
investment is considered immaterial relative to the Group's underlying
operations. The aggregate carrying value of the Group's interest in PBC was
£1.8 million (31 October 2023: £1.8 million), made up of an investment of
£1.8 million (31 October 2023: £1.8 million). The Group's share of profits
from continuing operations for the period was £nil (30 October 2023: £nil).
The Group's share of total comprehensive income of associates for the period
was £nil (31 October 2023: £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
£4.2 million (31 October 2023: £2.3 million), made up of an investment of
£4.2 million (31 October 2023: £2.3 million). The carrying value of the
investment increased in the financial year as a result of equity investment to
fund the Group's share of the cost of 3 new stores. The Group's share of
profits from continuing operations for the period was £nil (31 October 2023:
£nil). The Group's share of total comprehensive income of associates for the
period was £nil (31 October 2023: £nil).
9. Investment properties
Investment Investment properties Investment Total
properties, net of lease liabilities property investment
lease liabilities £'m under properties
£'m construction £'m
£'m
At 1 November 2023 2,681.1 101.2 108.6 2,890.9
Additions 45.9 11.7 80.0 137.6
Disposals - (1.6) - (1.6)
Reclassification at completed cost 56.1 - (56.1) -
Revaluations 301.9 - - 301.9
Fair value re-measurement of investment properties lease liabilities - (9.7) - (9.7)
Exchange movements (32.2) (1.0) (1.8) (35.0)
At 31 October 2024 3,052.8 100.6 130.7 3,284.1
Investment Investment properties Investment Total
properties, net of lease liabilities property investment
lease liabilities £'m under properties
£'m construction £'m
£'m
At 1 November 2022 2,457.8 95.1 94.5 2,647.4
Additions 67.6 17.5 56.4 141.5
Disposals - (3.1) - (3.1)
Reclassifications 42.0 - (42.0) -
Revaluations 103.5 - (0.9) 102.6
Fair value re-measurement of lease liabilities - (8.8) - (8.8)
Exchange movements 10.2 0.5 0.6 11.3
At 31 October 2023 2,681.1 101.2 108.6 2,890.9
The Group acquired the freehold of the Marais, Paris, property in May 2024.
This resulted in the disposal of lease liabilities with a carrying value of
£1.6 million.
The gain on revaluation of investment properties, net of lease liabilities
comprises:
Cost Revaluation Valuation
£'m on cost £'m
£'m
Freehold stores
At 1 November 2023 1,018.8 1,218.1 2,236.9
Movement in year 76.0 252.3 328.3
At 31 October 2024 1,094.8 1,470.4 2,565.2
Leasehold stores
At 1 November 2023 139.2 305.0 444.2
Movement in year 25.0 18.4 43.4
At 31 October 2024 164.2 323.4 487.6
All stores
At 1 November 2023 1,158.0 1,523.1 2,681.1
Movement in year 101.0 270.7 371.7
At 31 October 2024 1,259.0 1,793.8 3,052.8
2024 2023
£'m £'m
Revaluations of investment property and investment property under construction 301.9 102.6
Fair value re-measurement of investment properties lease liabilities (9.7) (8.8)
Gain on revaluation of investment properties 292.2 93.8
The valuation of £3,052.8 million (FY 2023: £2,681.1 million) excludes £0.4
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 2024 was £186.6 million (FY 2023: £188.5
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 FY 2023 lease liability of
£101.4 million per note 20 differs to the £101.2 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 FY 2023: £0.2 million (note 13).There are no differences between
lease liabilities and lease assets in the current year.
All direct operating expenses arising from investment property that generated
rental income as outlined in note 3 were £88.1 million (FY 2023: £82.0
million).
The freehold and leasehold investment properties have been valued as at 31
October 2024 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 2024 averages 90.9% (FY 2023: 89.3%). 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 12.1 months (FY 2023: 13.4 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
• The weighted average freehold exit yield on UK freeholds is 5.21%
(FY 2023: 5.75%), on France freeholds is 5.22% (FY 2023: 5.61%), on Spain
freeholds is 5.49% (FY 2023: 5.50%), on the Netherlands freeholds is 4.99% (FY
2023: 5.15%) and on Belgium freeholds is 4.77% (FY 2023: 5.00%). The weighted
average freehold exit yield for all freeholds adopted is 5.19% (FY 2023:
5.72%).
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 8.81% (FY 2023:
8.59%), in the France portfolio is 8.76% (FY 2023: 8.38%), in the Spain
portfolio is 8.60% (FY 2023: 8.39%), in the Netherlands portfolio is 7.26% (FY
2023: 7.74%) and in the Belgium portfolio is 8.12% (FY 2023: 7.99%). The
weighted average annual discount rate adopted (for both freeholds and all
leaseholds) is 8.66% (FY 2023: 8.54%).
• The Group's investment property assets have been valued for the
purposes of the financial statements after adjusting for notional purchaser's
costs of approximately 5.0% (UK), 5.0% to 6.4% (Paris), 6.0% to 10.0% (Spain),
10.4% (the Netherlands) and 12.0% to 12.5% (Belgium), as if they were sold
directly as property assets and sales plus purchaser's costs totalling
approximately 6.8% (UK), 6.8% to 8.2% (Paris), 7.8% to 11.8% (Spain), 12.2%
(the Netherlands) and 13.8% to 14.3% (Belgium) are assumed on the notional
sales in the tenth year in relation to freehold and long leasehold stores. 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.2.0% of gross
value. All the significant sized transactions that have been concluded in the
UK in recent years were completed in a corporate structure.
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.
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.
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
Investment properties under construction are initially measured at cost,
including related transaction and borrowing costs. After initial recognition,
investment properties under construction are held at fair value based on a
market valuation by C&W at each balance sheet date, unless development of
the property is not yet certain, in which case investment properties under
construction would be held at cost. To establish certainty, the Group
considers whether planning is unconditional, funding is in place, a full
business case has been approved by the Board and whether there is full control
over the site.
Immature stores
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.
Sensitivity of the valuation to assumptions
As noted in 'Key sources of estimation uncertainty', 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 Impact of a change in stabilised occupancy assumption Impact of a delay
capitalisation rates £'m in stabilised
£'m occupancy
assumption
£'m
25 bps decrease 25 bps increase 1% increase 1% decrease 24-month delay
Reported group 136.5 (124.0) 45.0 (45.0) (54.4)
10. 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:
2024 2023
Diluted pence £'m Diluted pence
£'m per share per share
Balance sheet net assets 2,226.8 1,017 1,935.1 884
Adjustments to exclude:
Deferred tax liabilities on the revaluation of investment properties 155.4 139.2
EPRA NTA 2,382.2 1,088 2,074.3 948
Basic net assets per share 1,020 888
EPRA basic NTA per share 1,091 952
The basic and diluted net assets per share have been calculated based on the
following number of shares:
2024 2023
Number Number
Shares in issue
At year end 218,490,500 218,039,419
Adjustment for Employee Benefit Trust (treasury) shares (75,397) (64,363)
IFRS/EPRA number of shares (basic) 218,415,103 217,975,056
Dilutive effect of Save As You Earn shares 7,769 39,269
Dilutive effect of Long Term Incentive Plan shares 567,621 860,328
IFRS/EPRA number of shares (diluted) 218,990,493 218,874,653
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 575,390 shares (FY 2023: 899,597 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
£2,382.2 million (FY 2023: £2,074.3 million), giving EPRA NTA per share of
1,088 pence (FY 2023: 948 pence). The Directors consider that these
alternative measures provide useful information on the performance of the
Group.
EPRA adjusted balance sheet (non-statutory)
2024 2023
£'m £'m
Assets
Non-current assets 3,302.7 2,906.8
Current assets 58.5 50.1
Total assets 3,361.2 2,956.9
Liabilities
Current liabilities (65.8) (110.4)
Non-current liabilities (913.0) (772.2)
Total liabilities (979.0) (882.6)
EPRA adjusted Net Asset Value 2,382.2 2,074.3
EPRA adjusted basic net assets per share 1,091 pence 952 pence
11. Cash and cash equivalents
2024 2023
£'m £'m
Cash at bank and in hand 25.3 16.9
The carrying amounts of the Group's cash and cash equivalents are denominated
in the following currencies:
2024 2023
£'m £'m
Sterling 12.2 4.9
Euros 13.1 12.0
25.3 16.9
Restricted cash of £0.9 million (FY 2023: £1.1 million) relates to the
provision in note 18. The restricted cash is held by HSBC and is used to
settle any amounts owed to the French tax authorities pending results of the
ongoing litigation.
12. Financial liabilities - bank borrowings and notes
2024 2023
£'m £'m
Bank loans and notes
Bank loans - RCF 355.7 203.0
USPP Notes 473.3 527.8
Debt issue costs (4.8) (5.0)
824.2 725.8
As at 31 October 2024 the Group has US Private Placement Notes ("USPPs") of
€307.1 million (FY 2023: €358 million) which have maturities between 2026
and 2033 with fixed-rate coupons of between 0.93% and 2.45% and £212.5
million (FY 2023: £212.5 million) which have maturities between 2026 and 2031
with fixed-rate coupons of between 1.96% and 2.92%. The weighted average cost
of interest on the overall USPPs at 31 October 2024 was 2.16% per annum. In
addition the Group has arranged a Revolving Credit Facility ("RCF") with its
relationship banks. In the financial year, the facility was extended by £100
million to £500 million and the maturity was extended by one year to November
2028. The RCF attracts a margin over SONIA/EURIBOR of between 1.25% and 2.50%,
by reference to the Group's performance against its interest cover covenant.
The €434.1 million of Euro denominated borrowings provides a natural hedge
against the Group's investment in the Paris and Expansion Markets 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 notes are stated after unamortised issue costs of £4.8 million
(FY 2023: £5.0 million).
Bank loans and unsecured notes are repayable as follows:
Group
2024 2023
£'m £'m
Within one year - 44.5
Between one and two years 93.7 -
Between two and five years 630.9 409.0
After more than five years 104.4 277.3
Bank loans and notes 829.0 730.8
Unamortised debt issue costs (4.8) (5.0)
824.2 725.8
The effective interest rates at the balance sheet date were as follows:
2024 2023
Bank loans (UK term loan) Monthly, quarterly or six-monthly SONIA plus 1.25% Monthly, quarterly or six-monthly SONIA plus 1.25%
Bank loans (Euro term loan) Monthly, quarterly or six-monthly EURIBOR plus 1.25% Monthly, quarterly or six-monthly EURIBOR plus 1.25%
Private Placement Notes (Euros) 1.83% 1.80%
Private Placement Notes (Sterling) 2.55% 2.55%
In addition to the margin of 1.25%, the RCF also has ESG targets enabling a
reduction in the margin of up to 5bps to 1.20%. In the period these targets
were all met.
The carrying amounts of the Group's borrowings are denominated in the
following currencies:
2024 2023
£'m £'m
Sterling 464.5 377.5
Euros 364.5 353.3
829.0 730.8
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available
at 31 October 2024 in respect of which all conditions precedent had been met
at that date:
Floating rate
2024 2023
£'m £'m
Expiring within one year - -
Expiring beyond one year 144.3 297.0
144.3 297.0
13. 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 Value
("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 £3.5 million (FY 2023: £2.0 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 12.
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 £15.6 million (FY 2023: £16.0 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 €364.5 million (FY
2023: €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 £6.9 million (FY 2023: (£2.9) million) was
recognised in other comprehensive income.
At 31 October 2024, if Sterling had weakened by 10% against the Euro with all
other variables held constant, pre-tax profit for the year would have been
£0.1 million lower due to Euro bank balances held by UK entities (FY 2023:
£0.4 million lower). Equity (translation reserve) would have been £34.7
million higher (FY 2023: £22.8 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.
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 2024 and 2023 were as follows:
2024 2023
£'m £'m
Total borrowings (excluding derivatives) 924.8 827.2
Less: cash and cash equivalents (note 11) (25.3) (16.9)
Net debt 899.5 810.3
Total equity 2,226.8 1,935.1
Total capital 3,126.3 2,745.4
Gearing ratio 28.8% 29.5%
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 25.1% at 31 October 2024 (FY
2023: 25.4%).
The Group has complied with all of the covenants on its banking facilities
during the year. The fair value of bank loans and notes is calculated as:
2024 2023
Book value Fair value Book value Fair value
£'m £'m £'m £'m
Bank loans and notes 824.2 759.6 725.8 789.3
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 2024 2023
£'m £'m
Amounts due from associates - Level 2 0.5 0.1
Liabilities per the balance sheet 2024 2023
£'m £'m
Bank loans - Level 2 829.0 725.8
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.
Hedging arrangements
No hedging instruments were used in FY2024. In FY 2023 a net loss of £1.7
million was recorded in the income statement due to the interest rate hedging
instruments which matured in June 2023 and the foreign currency hedging
instruments which matured in April 2023.
Financial instruments by category
Assets per the balance sheet Financial assets Assets at fair Total
at amortised cost value through £'m
£'m profit and loss
£'m
Trade receivables and other receivables excluding prepayments 22.6 - 22.6
Cash and cash equivalents 25.3 - 25.3
At 31 October 2024 47.9 - 47.9
Other financial Liabilities at fair Total
liabilities at value through £'m
Liabilities per the balance sheet amortised cost profit and loss
£'m £'m
Borrowings (excluding lease liabilities) 824.2 - 824.2
Lease liabilities 100.6 - 100.6
Payables and accruals 29.2 - 29.2
At 31 October 2024 954.0 - 954.0
Assets per the balance sheet Financial assets Assets at fair Total
at amortised cost value through £'m
£'m profit and loss
£'m
Trade receivables and other receivables excluding prepayments 22.5 - 22.5
Derivative financial instruments - - -
Cash and cash equivalents 16.9 - 16.9
At 31 October 2023 39.4 - 39.4
Other financial Liabilities at fair Total
liabilities at value through £'m
amortised cost profit and loss
£'m £'m
Liabilities per the balance sheet
Borrowings (excluding lease liabilities) 725.8 - 725.8
Lease liabilities 101.4 - 101.4
Payables and accruals 27.2 - 27.2
At 31 October 2023 854.4 - 854.4
The interest rate risk profile, after taking account of derivative financial
instruments, was as follows:
2024 2023
Floating rate Fixed rate Total Floating rate Fixed rate Total
£'m £'m £'m £'m £'m £'m
Borrowings 355.7 468.5 824.2 203.0 522.8 725.8
The weighted average interest rate of the fixed rate financial borrowing was
2.16% (FY 2023: 2.10%) and the weighted average remaining period for which the
rate is fixed was 4.3 years (FY 2023: 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.
Less than One to two Two to five More than
one year years years five years
£'m £'m £'m £'m
2024
Borrowings 9.3 103.1 657.4 123.6
Lease liabilities 14.7 14.2 35.0 75.5
Payables and accruals 28.6 - - -
52.6 23.5 617.6 367.8
Less than One to two Two to five More than
one year years years five years
£'m £'m £'m £'m
2023
Borrowings 54.6 10.2 436.0 297.0
Lease liabilities 13.8 13.7 36.4 77.0
Payables and accruals 29.4 - - -
97.8 23.9 472.4 374.0
14. Lease liabilities
The Group leases certain of its investment properties under lease liabilities.
The average remaining lease term is 13.2 years (FY 2023: 10.7 years).
Minimum lease payments Present value of minimum
lease payments
2024 2023 2024 2023
£'m £'m £'m £'m
Within one year 14.7 13.8 14.0 13.1
Within two to five years 49.2 50.1 42.3 42.0
Greater than five years 75.5 77.0 44.3 46.3
139.4 140.9 100.6 101.4
Less: future finance charges on lease liabilities (38.8) (39.5) - -
Present value of lease liabilities 100.6 101.4 100.6 101.4
2024 2023
£'m £'m
Current 14.0 13.1
Non-current 86.6 88.3
100.6 101.4
15. Called up share capital
2024 2023
£'m £'m
Called up, allotted, and fully paid
218,490,500 (FY 2023: 218,039,419) ordinary shares of 1 pence each 2.2 2.2
Ordinary shares
The holders of the ordinary shares shall be entitled to one vote for each
ordinary share.
During the year the Company issued 451,081 ordinary shares (FY 2023: 6,111,922
ordinary shares).
16. Cash flow from operating activities
Reconciliation of operating profit to net cash inflow from operating
activities:
Cash generated from continuing operations Notes 2024 2023
£'m £'m
Profit before income tax 398.6 207.8
Gain on revaluation of investment properties 9 (292.2) (93.8)
Depreciation 1.5 1.3
Net finance expense 27.2 22.6
Employee share options (0.3) 2.9
Changes in working capital:
Decrease in inventories - -
(Increase)/decrease in trade and other receivables 1.2 (1.4)
(Increase) in trade and other payables (2.6) (11.2)
Increase/(decrease) in provisions (0.3) 0.2
Cash generated from continuing operations 133.1 128.4
17. Analysis of movement in gross and net debt
2023 Cash flows Non-cash 2024
£'m £'m movements £'m
£'m
Bank loans (725.8) (110.3) 11.9 (824.2)
Lease liabilities (101.4) 9.7 (8.9) (100.6)
Total gross debt (liabilities from financing activities) (827.2) (100.6) 3.0 (924.8)
Cash in hand 16.9 8.7 (0.3) 25.3
Total net debt (810.3) (91.9) 2.7 (899.5)
2022 Cash flows Non-cash 2023
£'m £'m movements £'m
£'m
Bank loans (623.8) (96.4) (5.6) (725.8)
Lease liabilities (95.4) 8.8 (14.8) (101.4)
Total gross debt (liabilities from financing activities) (719.2) (87.6) (20.4) (827.2)
Cash in hand 20.9 (3.9) (0.1) 16.9
Total net debt (698.3) (91.5) (20.5) (810.3)
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 £1.6
million (FY 2023: £1.3 million), foreign exchange movements of £13.2 million
(FY 2023: £4.3 million) and unwinding of discount to lease liabilities of
£8.9 million (FY 2023: £14.8 million).
18. 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 £2.3 million at 31 October
2024 (31 October 2023: £2.6 million) to reflect the increased uncertainty
surrounding the likelihood of a successful outcome. Of the total provided,
£(0.2) million has been released in relation to the year ended 31 October
2024 within cost of sales (Underlying EBITDA) (31 October 2023: £0.3 million
within cost of sales (Underlying EBITDA). 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 in which the Group was successful to the French Supreme
Court. The maximum potential exposure in relation to these issues at 31
October 2024 is £0.8 million (31 October 2023: £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.
19. Contingent liabilities
The Group has a contingent liability in respect of property taxation in the
French subsidiary as disclosed in note 18.
20. Capital commitments
The Group had £119 million of capital commitments as at 31 October 2024 (FY
2023: £128 million).
21. Related party transactions
The Group's shares are widely held. Transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
Transactions with PBC Les Groues SAS
As described in note 8, the Group has a 24.9% interest in PBC Les Groues SAS
("PBC"). During the period, the Group made no transactions with PBC (FY 2023:
£nil (€nil)). The total amount invested is included as part of its
non-current investments in associates. The total amount outstanding at 31
October 2024 included within trade and other receivables was £nil (FY 2023:
£nil).
Transactions with CERF II German Storage Topco S.a.r.l ("CERF II")
As described in note 8, 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 relating to management services. The balance outstanding at 31
October 2024 is £0.5 million (FY 2023: £0.1m). These amounts are
considered to be fully recoverable and have not been impaired (FY 2023:
£nil).
22. Post-balance sheet events
In December 2024, the Group issued a new USPP loan note for a total of €70.0
million expiring in December 2032 with an all-in coupon of 4.03%.
In December 2024, the Group entered into a Joint Venture with Nuveen to
acquire the EasyBox self-storage business in Italy. The Group is investing
€42 million for a 50% share of EasyBox which has ten operating stores and
two further stores under development, all located in key cities in Italy. The
Group also entered into an agreement to manage the EasyBox business on behalf
of the Joint Venture.
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