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“I am pleased to report another excellent year in which we delivered significant strategic progress, having enhanced our funding capacity, doubled our development pipeline to c.1.4m sq ft of MLA and extended our geographical footprint. The strong trading performance for the year is especially pleasing as it follows a record year in 2021. Our 2022 result was achieved through strong revenue growth in the UK market, good performances in our Parisian and Spanish businesses, and seven months’ contribution from our Benelux business, which was acquired in March 2022. Early trading in the new financial year shows broadly stable levels of demand compared to last year (but significantly ahead of pre-pandemic levels) with rates paid by new customers continuing to grow. Over the last seven years, the Group has developed or acquired 68 stores and expanded into four new countries (Netherlands, Belgium, Spain and now Germany). In addition, our development pipeline of 29 new stores, extensions, and projects represents a further c.18% of our existing portfolio’s MLA. Throughout this period of expansion, the Group has maintained its disciplined approach to return on capital. In March 2022, the Group completed the acquisition of our partner Carlyle’s 80% stake in our Benelux JV. Over the last three years we have learnt much about the Netherlands and Belgian markets and feel confident about the ongoing development of our presence in these attractive geographies. It is our intention to gradually increase our footprint in these two markets and our development pipeline now includes five stores and c.283,000 sq ft of MLA in the Netherlands. Following this successful JV with Carlyle, we established a new German JV which has acquired the seven-store myStorage business. Germany is one of Europe’s most under-penetrated self storage markets and I look forward to growing our presence there. Our strong and flexible balance sheet has been significantly enhanced by the agreement of a new unsecured four-year £400 million multi-currency RCF which increases funding capacity, allowing us to continue to consider strategic, value-accretive investments as and when they arise. We have delivered a strong occupancy performance over recent years and, after a significant level of acquisition and development activity over the last six years, we still have 1.4m sq ft of fully invested currently unlet space in our UK, Paris, Spain and Benelux markets in addition to 1.4m sq ft of pipeline space. Our most significant upside opportunity is from filling our existing unlet space and that remains our priority. The business has demonstrated its inherent resilience in recent times and, despite the challenging macroeconomic environment, we are confident in the future of the business. The underlying fundamentals of the European self storage industry with limited supply, strong barriers to entry and a steadily growing product awareness are as strong as ever. Over the last nine years, Safestore has delivered a market leading 18% CAGR of its adjusted diluted EPRA EPS. During that period, we have gradually expanded our geographical reach to six European countries leveraging and improving our platform and central functions while managing investment risk very carefully. I’m confident that Safestore will continue to play a leading role in the development of the self storage industry across Europe, delivering significant further value to its stakeholders. None of this would be possible without the dedication and skills of our teams and I would like to thank all our colleagues in the UK, France, Spain, the Netherlands and Belgium for their performance in 2022 as well as their commitment and loyalty. We are appreciative of their efforts.”  Frederic Vecchioli, Safestore's Chief Executive Officer

Overview - 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.

The last year has been one of considerable strategic and financial progress for the Group which is especially impressive on the back of an exceptionally strong year in 2021. After three years in the role, I continue to be impressed by the dedication and resilience of the store 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.
 
Financial and Strategic Progress

In the last year the quality, resilience and, importantly, the scalability of the business model at Safestore have again been demonstrated and I am delighted to announce, on behalf of the Board of the Group, an excellent set of results for the financial year ended 31 October 2022.

Management’s first priority remains to maximise the economic return on our existing store portfolio and its 1.4 million sq ft of fully invested unlet space, building on the significant operational improvements made over the current management team’s tenure.

In addition to improving returns from our existing portfolio, the Group has continued to make significant strategic progress in expanding its footprint through a combination of new store openings and acquisitions. The Group has now acquired 46 and opened 20 stores over the last six years and all are performing well. The acquisition of OMB in Barcelona in 2019 is now fully integrated into the business and has an exciting pipeline, with two stores opening in November 2022, and a further six stores over the next two financial years. Our EPS accretive acquisition of the 80% share in the Benelux joint venture owned by Carlyle means that the Group now fully owns the operations of fifteen stores in the Netherlands and Belgium with a further five in the pipeline. Overall, we have a development property pipeline of an additional 1.4m sq ft of MLA, which provides significant future opportunity for the business and underpins our continued growth.

The recent establishment of a new £400 million unsecured multi-currency RCF at attractive margins offers us significantly greater strategic flexibility to support these growth plans.

Our new joint venture¹ with Carlyle in Germany and recent acquisitions in Spain, the Netherlands and Belgium provide us with exciting platforms in new attractive geographies. I believe that Safestore’s highly scalable platform will allow us to take advantage of further opportunities in due course.

Financial results

Revenue for the year was £212.5 million, 13.8% ahead of last year (FY2021: £186.8 million), or 14.3% ahead on a constant currency basis. Like-for-like² revenue was up 10.7% in constant currency. This result was driven by an exceptional performance in the UK which grew like-for-like² revenue by 12.2%, combined with another strong performance by Une Pièce en Plus, our Parisian business, which grew like-for-like² revenue by 5.3%.

Particularly encouragingly, this significant growth in revenue delivered a further improvement in margins. Underlying EBITDA³ increased by 14.5% to £135.1 million (FY2021: £118.0 million) and on a constant currency basis by 15.1%.

Operating profit increased by £97.5 million from £417.0 million in 2021 to £514.5 million in 2022, reflecting a higher investment property gain in 2022 combined with the increase in Underlying EBITDA³, a reduction in the share-based payments charge, as well as other exceptional gains.

Adjusted Diluted EPRA Earnings per Share⁴ grew by 17.3% to 47.5 pence (FY2021: 40.5 pence). Adjusted Diluted EPRA Earnings per Share⁴ has grown by 36.8 pence or 344% over the last nine years. Statutory diluted Earnings per Share increased to 212.4 pence (FY2021: 176.4 pence) as a result of the increase in Adjusted Diluted EPRA Earnings per Share⁴ combined with an increased gain on valuation of investment properties.
 
Finally, the Group’s balance sheet remains robust with a Group LTV⁵ ratio of 24.4%, calculated on gross debt (FY2021: 24.9%) and an ICR⁶ of 11.4x (FY2021: 10.5x). 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.
 
This year’s results continue a sustained period of excellent performance by the Group. Over the last nine years, the management and store teams have delivered a Total Shareholder Return of 779.4%, 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

Away from the financial results, I am pleased with the progress the Group has made with its ESG strategy.

Even though Safestore already has one of the lowest environmental impact profiles of any company within the overall property sector, we have continued to focus on our environmental agenda, with year-on-year reductions in greenhouse gas emissions and enhanced disclosures in recognition of the recommendations of the TCFD. I am pleased to report that we have retained a Silver rating in the 2022 EPRA sustainability awards, an ‘A’ rating for public disclosures by GRESB, an ‘AA’ rating for ESG by MSCI and the highest rating of five stars by Support the Goals.

In addition, we have demonstrated our commitment to our ESG agenda by linking the margin on our new £400 million bank facility to ESG related KPI’s 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.

Non-Executive Board changes
During the financial year Claire Balmforth stepped down from the Board. Claire has served on the Safestore Board for six years and has chaired the Remuneration Committee for all that time. As both a Director and  Chair of the Remuneration Committee, Claire has served the business outstandingly throughout the last six years and both personally and on behalf of the Board I would like to thank her for her contribution.
 
I am also delighted to welcome Jane Bentall to the Board. Jane has extensive experience and understanding of operating multi-site, consumer-led businesses. Most recently, Jane was Managing Director of Haven, the UK holiday parks chain and largest business division of Bourne Leisure. Prior to becoming Managing Director of Haven, she was the Group Chief Financial Officer for twelve years and previously spent six years as Operations Director. In her career she has also held senior financial roles at the Rank Group.

Dividend

Finally, reflecting the Group’s strong trading performance and in line with our progressive dividend policy, the Board is pleased to recommend a 15.9%  increase in the final dividend to 20.4 pence per share (FY2021: 17.6 pence) resulting in a full year dividend up 18.7% to 29.8 pence per share (FY2021: 25.1 pence).

Over the last nine years, the Group has grown the dividend by 418% or 24.1 pence per share during which period the Group has returned to shareholders a total of 155.8 pence per share. The total dividend for the year is covered 1.59 times by Adjusted EPRA Diluted Earnings (1.61 times in 2021). Shareholders will be asked to approve the dividend at the Company’s Annual General Meeting on 15 March 2023 and, if approved, the final dividend will be payable on 7 April 2023 to Shareholders on the register at close of business on 3 March 2023.

Summary

In conclusion, the Board remains confident in the future growth prospects for the Group and will continue its progressive dividend policy in 2023 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 Share⁴.
 

David Hearn

Chairman

1 – On 30 March 2022, the Group acquired the remaining 80% of the Joint Venture with CERF. Prior to acquiring the 80%, the Joint Venture with CERF, which represented a 20% investment, was accounted for as an associate using the equity method of accounting, as described in the “Investment in associates” note to the financial statements.
2 – Like-for-like adjustments remove the impact of the 2022 acquisition of the Netherlands and Belgium Joint Venture, the 2022 acquisition of Christchurch, the 2022 openings of Bow, Nijmegen (Netherlands) and Barcelona, the 2021 openings of Birmingham Middleway and Magenta in Paris and the 2021 closure of Birmingham South.
3 – Underlying EBITDA is defined as Operating Profit before exceptional items, share-based payments, corporate transaction costs, change in fair value of derivatives, gain/loss on investment properties, variable lease payments, depreciation and the share of associate’s depreciation, interest and tax. Underlying EBITDA therefore excludes all leasehold rent charges. Underlying profit before tax is defined as Underlying EBITDA less leasehold rent, depreciation charged on property, plant and equipment and net finance charges relating to bank loans and cash.
4 – Adjusted Diluted EPRA EPS is based on the European Public Real Estate Association's definition of Earnings and is defined as profit or loss for the period after tax but excluding corporate transaction costs, change in fair value of derivatives, gain/loss on investment properties and the associated tax impacts. The Company then makes further adjustments for the impact of exceptional items, IFRS 2 share-based payment charges, exceptional tax items and deferred tax charges. This adjusted earnings is divided by the diluted number of shares. The IFRS 2 cost is excluded as it is written back to distributable reserves and is a non-cash item (with the exception of the associated National Insurance element). Therefore neither the Company’s ability to distribute nor pay dividends is impacted (with the exception of the associated National Insurance element). The financial statements will disclose earnings on a statutory, EPRA and Adjusted Diluted EPRA basis and will provide a full reconciliation of the differences in the financial year in which any LTIP awards may vest.
5 – LTV ratio is Loan-to-Value ratio, which is defined as gross debt (excluding lease liabilities) as a proportion of the valuation of investment properties and investment properties under construction (excluding lease liabilities). At 31 October 2022, the Group LTV ratio was 24.4%. Under the new revolving credit facility, signed 11 November 2022, LTV is to be calculated against net debt which equates to an LTV of 23.6%.
6 – ICR is interest cover ratio, and is calculated as the ratio of Underlying EBITDA after leasehold rent to underlying finance charges.