Safestore Holding plc Annual Report and Accounts and AGM documents
11 February 2022
Safestore Holdings plc ("the Company" or "the Group") Publication of Annual Report and Accounts 2021, Notice of 2022 Annual General Meeting and Proxy Voting Arrangements
Safestore Holdings plc ("the Company") announces, in accordance with Listing Rules 9.6.1 and 9.6.3, that copies of the Annual Report and Accounts 2021, Notice of 2022 Annual General Meeting have been submitted to the Financial Conduct Authority and will shortly be available for inspection on the national storage mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
These documents have been posted to those shareholders who have elected to receive hard copy communications or have otherwise been made available to shareholders today.
The Company's 2022 Annual General Meeting will be held at Brittanic House, Stirling Way, Borehamwood, Hertfordshire WD6 2BT at 12 noon on Wednesday, 16 March 2022. Full details of the proposed resolutions are set out in the Notice of Meeting.
The Annual Report and Accounts for the year ended 31 October 2021 is now available for download from the Company's website at:
https://www.safestore.co.uk/corporate/investors/report-and-presentations/
The Notice of 2022 Annual General Meeting is also available for download from the Group's website at:
https://www.safestore.co.uk/corporate/investors/report-and-presentations/
All shareholders are encouraged to complete and submit a proxy appointment online by using our electronic proxy appointment service offered by our Registrar, Link Group, at www.signalshares.com. All votes must be received by 12 noon on 14 March 2022.
Shareholders unable to locate any of the documents on the web page, need help with voting online or require a paper proxy form, please contact our Registrar, Link Group by email to enquiries@linkgroup.co.uk or you may call Link on +44 (0)371 664 0391. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00am and 5.30pm Monday to Friday, excluding public holidays in England and Wales.
The information included in the appendix to this announcement has been extracted from the Annual Report and is reproduced here solely for the purpose of complying with Disclosure Guidance and Transparency Rule ("DTR") 6.3.5 on respect of how to make annual financial reports available to the public.
The content of this announcement, including the appendix, should be read in conjunction with the preliminary announcement of annual results, (the "Preliminary Results Announcement")* released on 13 January 2022, which is available on the Company's website at:
https://www.safestore.co.uk/corporate/investors/report-and-presentations/
Together these announcements constitute the material required by DTR 6.3.5 to be communicated in full unedited text through a Regulatory Information Service. This material is not a substitute for reading the full Annual Report. Defined terms used in the appendix refer to terms as defined in the Annual Report. Page numbers in the appendix refer to pages in the Annual Report.
For further information, please contact:
Safestore Holdings plc
Helen Bramall, Company Secretary Tel: 020 8732 1500
LEI Code: 213800WGA3YSJC1YOH73
Additional Disclosures Not Included in Preliminary Results Announcement
Statement of Directors' responsibilities
Page 109 of the Annual Report contains the following statement regarding responsibility for the financial statements and the management report included in the Annual Report.
The Directors, who are named on pages 66 and 67, are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare such financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to prepare the parent company financial statements in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the parent company and of the profit or loss of the Group for that period.
In preparing the parent company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether Financial Reporting Standard 101 'Reduced Disclosure Framework' has been followed, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
In preparing the Group financial statements, International Accounting Standard 1 requires that Directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
• make an assessment of the Group's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the parent company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website at www.safestore.co.uk. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors' responsibility statement
We confirm that, to the best of our knowledge:
• the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the undertakings included in the consolidation taken as a whole;
• the strategic report includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
• the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
Principal risks and risk management
Pages 33 to 38 of the Annual Report contain the following statement on principal risks and uncertainties faced by the Group.
Risks are considered at every business level and are assessed, discussed and taken into account when deciding upon future strategy, approving transactions and monitoring performance
Risks and risk management
The Board recognises that effective risk management requires awareness and engagement at all levels of our organisation.
Risk management process
The Board is responsible for determining the nature of the risks the Group faces, and for ensuring that appropriate mitigating actions are in place to manage them in a manner that enables the Group to achieve its strategic objectives.
Effective risk management requires awareness and engagement at all levels of our organisation. It is for this reason that the risk management process is incorporated into the day-to-day management of our business, as well as being reflected in the Group's core processes and controls. The Board has defined the Group's risk appetite and oversees the risk management strategy and the effectiveness of the Group's internal control framework. Risks are considered at every business level and are assessed, discussed and taken into account when deciding upon future strategy, approving transactions and monitoring performance.
Strategic risks are identified, assessed and managed by the Board, with support from the Audit Committee, which in turn is supported by the Risk Committee. Strategic risks are reviewed by the Audit Committee to ensure they are valid and that they represent the key risks associated with the current strategic direction of the Group. Operational risks are identified, assessed and managed by the Risk Committee and Executive Team members, and reported to the Board and the Audit Committee. These risks cover all areas of the business, such as finance, operations, investment, development and corporate risks.
The risk management process commences with rigorous risk identification sessions incorporating contributions from functional managers and Executive Team members. The output is reviewed and discussed by the Risk Committee, supported by members of senior management from across the business. The Board, supported by the Risk Committee, identifies and prioritises the top business risks, with a focus on the identification of key strategic, financial and operational risks. The potential impact and likelihood of the risks occurring are determined, key risk mitigations are identified and the current level of risk is assessed against the Board's risk appetite. These top business risks form the basis for the principal risks and uncertainties detailed in the section below.
Principal risks and uncertainties
The principal risks and uncertainties described are considered to have the most significant effect on Safestore's strategic objectives.
The key strategic and operational risks are monitored by the Board and are defined as those which could prevent us from achieving our business goals. Our current strategic and operational risks and key mitigating actions are as follows:
| Risk | Current mitigation activities | Developments since 2020 |
| Strategic risks | ||
| The Group develops business plans based on a wide range of variables. Incorrect assumptions about the economic environment, the self-storage market, or changes in the needs of customers or the activities of customers may adversely affect the returns achieved by the Group, potentially resulting in loss of shareholder value or loss of the Group's status as the UK's largest self storage provider. | · The strategy development process draws on internal and external analysis of the self-storage market, emerging customer trends and a range of other factors. · Continuing focus on yield-management with regular review of demand levels and pricing at each individual store. · Continuing focus on building the Safestore brand, acquisitions and development projects. · The portfolio is geographically diversified with performance monitoring covering the personal and business customers by segments. · Detailed and comprehensive sensitivity and scenario modelling taking into consideration variable assumptions. · Robust cost management.
| The Group's strategy is regularly reviewed through the annual planning and budgeting process, and regular reforecasts are prepared during the year.
The Group expanded the joint venture with Carlyle, which acquired Opslag and Leiwas stores in the Netherlands. The Group continues to earn management fees and a 20% share of the profits of the joint venture.
The acquisition of new stores together with new store openings have been fully integrated in the Group's store portfolio.
The level of risk is considered similar to the 31 October 2020 assessment. |
| Pandemic risk | ||
| The Covid-19 outbreak is an unprecedented global event whose impacts and duration are now more widely understood. While the Group now more clearly understands the impacts of the pandemic on the business, we need to be adaptable in ensuring our business resilience and maintaining our strong performance.
| · The resilient nature of the Group's businesses, our robust balance sheet, and the market fundamentals that underpin our businesses inherently provide mitigation to the Group from pandemic risk. · Our Group strategic plans and forecasts have provided an additional layer of mitigation through the Covid-19 crisis. · The Group continues to monitor and assess the potential and realised impacts of Covid-19. | The Covid-19 pandemic has resulted in a significant reduction in the economic growth of the UK and Europe in 2020 and 2021. The implications of Covid-19 have been thoroughly considered with respect to the Group's strategy through the annual planning and budgeting process. Covid-19 will continue to be monitored through regular and periodic reforecasts and scenario analysis during 2022. The level of risk is considered similar to the 31 October 2020 assessment.
|
| Finance risk | ||
| Lack of funding resulting in inability to meet business plans or satisfy liabilities or a breach of covenants. | · Funding requirements for business plans and the timing for commitments are reviewed regularly as part of the monthly management accounts. · The Group manages liquidity in accordance with Board-approved policies designed to ensure that the Group has adequate funds for its ongoing needs. · The Board regularly monitors financial covenant ratios and headroom. · All of the Group's banking facilities now run to 30 June 2023. The US Private Placement Notes mature in five, seven, eight and ten years. · New US Private Placement Notes secured during the year with maturity ranging from seven years (2028) to twelve years (2033). | In October 2019, the Group issued a further £125 million Sterling and Euro loan notes, maturing in seven and ten years. The Group's loan-to-value ratio ("LTV") has broadly remained constant during the year, decreasing 4ppts from 29% to 25%, with increased debt due to development and acquisition activity being partially offset by the valuation increase in the store portfolio.
Since the end of 2020, there have been significant opportunities to invest in new stores, in both the UK and throughout Europe, and as a result the Group has secured additional US Private Placement Note funding for £150 million with a further uncommitted shelf debt facility of c. £80 million.
Therefore, this risk continues to remain low and broadly unchanged from the 31 October 2020 assessment.
|
| Treasury risk | ||
| Adverse currency or interest rate movements could see the cost of debt rise, or impact the Sterling value of income flows or investments. | · Guidelines are set for our exposure to fixed and floating interest rates and use of interest rate swaps to manage this risk. · Foreign currency denominated assets are financed by borrowings in the same currency where appropriate. · The Group has entered into FX forwards to reduce the volatility associated with the translation risk of the Euro. | Euro denominated borrowings continue to provide an effective, natural hedge against the Euro-denominated net assets of our French and Spanish businesses.
We have managed the transition from LIBOR to SONIA effectively.
This risk remains low. Mitigation of future rate increases is provided by our interest rate swaps and fixed interest borrowings, so the risk of adverse interest rate fluctuations remains broadly unchanged since the prior year.
|
| Property investment and development risk | ||
| Acquisition and development of properties that fail to meet performance expectations, overexposure to developments within a short timeframe or the inability to find and open new stores may have an adverse impact on the portfolio valuation, resulting in loss of shareholder value. Corporate transactions may be at risk of competition referral or post transaction legal or banking formalities.
| · Thorough due diligence is conducted and detailed analysis is undertaken prior to Board approval for property investment and development. · Execution of targeted acquisitions and disposals. · The Group's overall exposure to developments is monitored and controlled, with projects phased to avoid over-commitment. · The performance of individual properties is benchmarked against target returns and post-investment reviews are undertaken. | Projects are not pursued when they fail to meet our rigorous investment criteria, and post-investment reviews indicate that sound and appropriate investment decisions have been made.
The capital requirements of development projects undertaken during the year have been carefully forecasted and monitored, and we continue to maintain significant capacity within our financing arrangements.
We continue to pursue investment and development opportunities, and consider our recent track record to have been successful. Therefore, the Board considers that there has been no significant change to this risk since the 31 October 2020 assessment. |
| Valuation risk | ||
| Value of our properties declining as a result of external market or internal management factors could result in a breach of borrowing covenants. In the absence of relevant transactional evidence, valuations can be inherently subjective leading to a degree of uncertainty. | · Independent valuations are conducted regularly by experienced, independent, professionally qualified valuers. · A diversified portfolio which is let to a large number of customers helps to mitigate any negative impact arising from changing conditions in the financial and property markets. · Headroom of LTV banking covenants is maintained and reviewed. · Current gearing levels provide sizeable headroom on our portfolio valuation and mitigate the likelihood of covenants being endangered.
| The valuation of the Group's portfolio has continued to grow during the year, reflecting both valuation gains arising from the increasing profitability of our portfolio and additions to our portfolio through corporate acquisitions and the opening of new development stores. The level of this risk is viewed as broadly similar to the 31 October 2020 assessment. |
| Occupancy risk | ||
| A potential loss of income and increased vacancy due to falling demand, oversupply or customer default, which could also adversely impact the portfolio valuation. | · Personal and business customers cover a wide range of segments, sectors and geographic territories with limited exposure to any single customer. · Dedicated support for enquiry capture. · Weekly monitoring of occupancy levels and close management of stores. · Management of pricing to stimulate demand, when appropriate. · Monitoring of reasons for customers vacating and exit interviews conducted. · Independent feedback facility for customer experience. · The like-for-like occupancy rate across the portfolio has continued to grow partly due to flexibility offered on deals by in-house marketing and the Customer Support Centre.
| Covid-19 has resulted in a contraction in economic growth. However, recent like-for-like occupancy trends have been strong and the newly opened stores are performing well.
Growth in our store portfolio diversifies the potential impact of underperformance of an individual store.
The risk continues to remain low and consistent with the assessment for the year ended 31 October 2020. |
| Real estate investment trust ("REIT") risk | ||
| Failure to comply with the REIT legislation could expose the Group to potential tax penalties or loss of its REIT status. | · Internal monitoring procedures are in place to ensure that the appropriate rules and legislation are complied with and this is formally reported to the Board. | The Group has remained compliant with all REIT legislation throughout the year. There has been no significant change to this risk since the 31 October 2020 assessment.
In addition, we have also reviewed the recent amendments to the UK REIT rules, taking effect from 1 April 2022, which do not affect this assessment.
|
| Catastrophic event | ||
| A major catastrophic event could mean that the Group is unable to carry out its business for a sustained period or health and safety issues put customers, staff or property at risk.
These may result in reputational damage, injury or property damage, or customer compensation, causing a loss of market share and/or income. | · Business continuity plans are in place and tested. · Back-up systems at offsite locations and remote working capabilities. · Reviews and assessments are undertaken periodically for enhancements to supplement the existing compliant aspects of buildings and processes. · Monitoring and review by the Health and Safety Committee. · Robust operational procedures, including health and safety policies, and a specific focus on fire prevention and safety procedures. · Fire risk assessments in stores. · Periodic security review of all systems supported by external monitoring and penetration testing. · Limited retention of customer data. · Online colleague training modules.
| Continuing focus from the Risk Committee, with particular attention to specific issues.
The level of risk is considered similar to the 31 October 2020 assessment.
|
| Regulatory compliance risk | ||
| The regulatory landscape for UK listed companies is constantly developing and becoming more demanding, with new reporting and compliance requirements arising frequently. Non- compliance with these regulations can lead to penalties, fines or reputational damage. Changes in tax regimes could affect tax expenditure.
The Group is also subject to the risk of compulsory purchases of property, which could result in a loss of income and impact the portfolio valuation.
| · Monitoring and review by the Risk Committee. · Project-specific steering committees to address the implementation of new regulatory requirements. · Liaison with relevant authorities and trade associations. · Where a store is at risk of compulsory purchase, contingency plans are developed. · Legal and professional advice. · Online training modules. | The framework of tax controls has been reviewed during the year, ensuring key tax risks are in line with the Group's obligations. All regulatory compliance risks have been monitored during the year.
The level of risk is considered similar to the 31 October 2020 assessment.
|
| Marketing risk | ||
| Our marketing strategy is critical to the success of the business. This includes maintaining web leadership and our relationship with Google.
A lack of effective strategy would result in loss of income and market share and adversely impact the portfolio valuation.
| · Constant measuring and monitoring of our web presence and ensuring compliance with rules and regulations. · Market leading website. · Use of online techniques to drive brand visibility. · Our pricing strategy monitors and adapts to evolving customer behaviour. | We continue to build functional expertise at Group level in performance marketing, organic and local searches and analytics.
The Group marketing forum continues to review performance, market developments and our ongoing improvement plan.
We have implemented a new value and quality focused performance marketing strategy.
The level of risk is considered similar to the 31 October 2020 assessment.
|
| IT security/GDPR | ||
| Cyber-attacks and data security breaches are becoming more prominent with greater sophistication of attacks. This has the potential to result in reputational damage, fines or customer compensation, causing a loss of market share and income | · Constant monitoring by the IT department and consultation with specialist advice firms ensure we have the most up-to-date security available. · Twice yearly formal IT security review at Group Audit Committee. · We minimise the retention of customer and colleague data in accordance with GDPR best practice. · The policies and procedures are under constant review and benchmarked against industry best practice. These policies also include defend, detect and response policies. | During the year the Group continued to invest in digital security. Some of the changes include more frequent penetration testing of internet facing systems, adding components such as anti-ransomware as well as the replacement of components such as firewalls to the latest technology and specification.
The risk is not considered to have increased for the Group nor is the Group considered to be at greater risk than the wider industry; however, we consider that digital threats on the whole are increasing.
The level of risk is considered similar to the 31 October 2020 assessment.
|
| Brand and Reputational risk | ||
| Our reputation, with Safestore's growth and the increased awareness of self storage, including increased demand driving higher prices, may potentially attract greater social media attention and scrutiny.
| · Constant involvement by the Retail Service team to engage with customers and address their concerns. · Constant training of the store teams to provide a clear and concise communication strategy to customers. · Our understanding of and engagement with all our stakeholders enables early visibility of dissatisfaction.
| The Retail Service function always engages with customers to resolve any issues or complaints.
Pages 50 to 54 of our sustainability report provide insight into how we engage with our customers and the community.
The level of risk is considered similar to the 31 October 2020 assessment.
|
| Geographical expansion | ||
| The Group has invested in expanding the overseas operations of the business through both subsidiaries and the Joint Venture with Carlyle over the last two years.
Suitable new sites may become more difficult to find, with new sites failing to achieve the required occupancy and therefore deliver the required sales and profitability within an acceptable timeframe. Integration of smaller acquisitions may be challenging where the infrastructure of the acquired business is not of a level required by Group.
| · Large portfolio of potential new sites, prioritised based on detailed research into areas most likely to be successful. · Strong operational knowledge and experience in integrating new business. · We have well documented procedures for the integration of new acquisitions and a good track record of recent success. | The level of risk is considered similar to the 31 October 2020 assessment. |
| Human Resource Risk | ||
| Fundamental to the Group's success are our people. As such, due to market competitiveness, we are exposed to a risk of colleague turnover, and subsequent loss of key personnel and knowledge. | · The Group embarked upon its five-year strategic plan in 2017 and during this period has had an efficient, high performing and stable management team in place. Our retention strategy aims to ensure we achieve long term engagement, through a combination of motivating factors. · We continue to consult regularly with our management team and monitor involuntary turnover. We maintain adequate succession for our key talent. · The Board and Remuneration Committee regularly review colleague feedback provided through surveys, our workforce advisory panel and CEO town hall events. These mechanisms enable colleagues to raise questions, discuss wider business issues and provide feedback on subjects including wider workforce remuneration. · In early 2021, Safestore received the Investors in People Platinum Accreditation. This demonstrates that our colleagues are happy, healthy, safe and engaged in supporting Safestore to deliver sustainable business performance.
| The level of risk is considered to have increased slightly from the 31 October 2020 assessment.
|
| Climate change related risk | ||
| The Group is exposed to climate change related transition and physical risks. Physical risks may affect the Group's stores and may result in higher maintenance, repair and insurance costs. Failing to transition to a low carbon economy may cause an increase in taxation, decrease in access to loan facilities and reputational damage. | · The good working order of our stores is of critical importance to our business model with our standing commitment to provide long term sustainable real estate investment. · Physical climate risk of new developments is evaluated as part of the investment appraisal process for new developments. · We have a proactive maintenance programme in place with a regular programme of store inspection with our maintenance teams following sustainable principles and, wherever practicable, using materials that have recycled content or are from sustainable sources. · If we choose to develop a store in a high risk area, we usually proactively deploy flood mitigation measures. · We are committed to build to a minimum standard of BREEAM 'Very Good' on all of our new store developments. · All new store developments are registered with the Considerate Constructors Scheme, which considers the public, the workforce and the environment.
| As part of our journey to enhance our disclosures along the recommendations of the TCFD, the Group is continuing to develop its understanding of its exposure and vulnerability to climate change risk Our Sustainability Committee, with representation from across all levels of the business, is considering the impact of climate change related risks and is working with the Board and its suppliers to develop an ambitious plan to reduce carbon emissions.
Our investment appraisal process has been updated to consider climate change related risks of new investments.
The level of risk is considered similar to the 31 October 2020 |
| Consequences of the UK's decision to leave the EU ("Brexit") | ||
| The uncertainty associated with the UK's future relationship with the EU has significantly reduced. As the Group does not directly rely on imports or exports, the Group is largely protected from the near term impact of the UK's exit from the EU. Nonetheless, changes associated with further regulation will be closely monitored and assessed. | · Economic uncertainty is not a new risk for the Group, but Brexit increased the likelihood of previously recognised risks, and is addressed under the finance risk, treasury risk and valuation risk categories above. · Self storage is a localised industry, with a broad and diversified customer base, so demand has shown no initial adverse impact post Brexit and is unlikely to be significantly impacted in the future. · The Group's workforce in the UK includes a low proportion of employees whose right to work in the UK may be impacted by potential Brexit-related legislation changes.
| As the Group had only limited exposure to the direct risks that arose due to Brexit, the level of this risk is considered to have significantly reduced since the 31 October 2020 assessment. |
Viability statement
The UK Corporate Governance Code requires us to issue a "viability statement" declaring whether we believe Safestore can continue to operate and meet its liabilities, taking into account its current position and principal risks. The overriding aim is to encourage Directors to focus on the longer term and be more actively involved in risk management and internal controls. In assessing viability, the Board considered a number of key factors, including our strategy (see page 6), our business model (see pages 15 and 16), our risk appetite and our principal risks and uncertainties (see pages 33 to 37 of the strategic report).
The Board is required to assess the Company's viability over a period greater than twelve months, and in keeping with the way that the Board views the development of our business over the long term a period of three years is considered appropriate, and is consistent with the timeframes incorporated into the Group's strategic planning cycle, with the review considering the Group's cash flows, dividend cover, REIT compliance, financial covenants and other key financial performance metrics over the period. Our assessment of viability therefore continues to align with this three-year outlook.
In assessing viability, the Directors considered the position presented in the budget and three-year plan recently approved by the Board. In the context of the current environment, four plausible sensitivities were applied to the plan, including a stress test scenario. These were based on the potential financial impact of the Group's principal risks and uncertainties and the specific risks associated with the continued Covid-19 pandemic. These scenarios are differentiated by the impact of demand and enquiry levels , average rate growth and the level of cost savings. A test sensitivity was also performed where we have carried out a reverse stress test to model what would be required to breach ICR and LTV covenants which indicated highly improbable changes would be needed before any issues were to arise.
During the year, Safestore was successful in extending its borrowing facilities, with the issuance of the equivalent of £149 million new Sterling and Euro denominated US Private Placement ("USPP") Notes. The current revolving credit facilities of £250 million and €70 million mature in June 2023. In assessing viability sensitivities, it has been assumed that RCF refinancing will be available on similar terms to those negotiated in 2019, maturing in 2023. In making this viability statement, with the current strength of underlying performance of the business and its balance sheet, the Directors are of the view that it is reasonable to expect the refinancing of the RCF to be available on similar terms.
The impact of these scenarios and sensitivities has been reviewed against the Group's projected cash flow position and financial covenants over the three-year viability period. Should any of these scenarios occur, clear mitigating actions are available to ensure that the Group remains liquid and financially viable.
Such mitigating actions available includes, but not limited to, are reducing planned capital and marketing spend, pay and recruitment measures, making technology and operating expenditure cuts and utilisation of available headroom on existing debt facilities.
Further, the Covid-19 pandemic resulted in a significant reduction in the economic growth of the UK and Europe in 2020. The continued potential implications of Covid-19 have been thoroughly considered with respect to the Group's strategy through the annual planning and budgeting process. Covid-19 will continue to be monitored through regular and periodic reforecasts and scenario analysis over the next twelve months and align with the three-year outlook of this review during the 2022 financial year.
The Audit Committee reviews the output of the viability assessment in advance of final evaluation by the Board. The Directors have also satisfied themselves that they have the evidence necessary to support the statement in terms of the effectiveness of the internal control environment in place to mitigate risk.
Having reviewed the current performance, forecasts, debt servicing requirements, total facilities and risks, the Board has a reasonable expectation that the Group has adequate resources to continue in operation, meets its liabilities as they fall due, retain sufficient available cash across all three years of the assessment period and not breach any covenant under the debt facilities. The Board therefore has a reasonable expectation that the Group will remain commercially viable over the three-year period of assessment.
*Typographical Correction:
This announcement corrects a typographical error reported in the financial review section (Underlying Finance Charge) of the Preliminary Results Announcement released on 13 January 2022. The total in the Facility column of the table is corrected to £738.3m. The Preliminary Results Announcement published on the Company's website and the Annual Results Presentation have been updated.
Notes to editors:
· Safestore is the UK's largest self-storage group with 161 stores at 31 October 2021 comprising 128 wholly owned stores in the UK (including 71 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool, Sheffield, Leeds, Newcastle and Bristol), 29 wholly owned stores in the Paris region and four stores in Barcelona. In addition, the Group operates eight stores in the Netherlands and six stores in Belgium under a joint venture agreement with Carlyle.
· 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 densest 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 80,000 personal and business customers.
· As at 31 October 2021, Safestore had a maximum lettable area ("MLA") of 6.960 million sq ft (excluding the expansion pipeline stores, and the Carlyle Joint Venture) of which 5.883 million sq ft was occupied.
· Safestore employs around 700 people in the UK, Paris and Barcelona.
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