Last checked at 18 Feb 2014 10:05
18 February 2014
Safestore Holdings plc
("the Company")
Annual Report and Accounts 2013
The Company announces that the Annual Report and Accounts for the year ended 31 October 2013 and the notice of the Annual General Meeting to be held on 19 March 2014 has been mailed to shareholders. Copies of these documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.hemscott.com/nsm.do
This document is also available to view on the Company's website at www.safestore.com
In compliance with DTR 6.3.5, the following information is extracted from the 2013 Annual Report and Accounts and should be read together with the Company's Final Results announcement issued on 30 January 2014. Together these constitute the information required to be communicated to the media in unedited full text through a Regulatory Information Service. This information is not a substitute for reading the full 2013 Annual Report and Accounts.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report, the Directors' remuneration report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 Company and of the profit or loss of the Group for that period. In preparing these 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 IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the group and parent company financial statements respectively; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the 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 Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.
Each of the Directors, whose names and functions are listed on pages 41 and 42 confirm that, to the best of their knowledge:
• the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
• the Directors' report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
In accordance with Section 418 of the Companies Act 2006 Directors' reports shall include a statement, in the case of each Director in office at the date the Directors' report is approved, that:
• so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and
• he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
The Annual Report was approved by the Board of Directors and authorised for issue on 30 January 2014 and signed on behalf of the Board by Frederic Vecchioli, Chief Executive Officer, and Andy Jones, Chief Financial Officer.
Principal risks and risk management
Principal risks
The Group regularly reviews the risks within the Group. Risk management is a dynamic and critical business function as it is important to help achieve long-term shareholder value and protect our business, people, assets, capital and reputation. It is a fundamental aspect of the business and is subject to regular and ongoing reviews. We continuously identify and manage those risks and opportunities that could affect Safestore and the achievement of our business plans and strategic objectives. Our approach is aimed at early identification of key risks, reducing or removing those risks and/or responding quickly and effectively when a risk crystallises. In each instance, where possible, we seek to mitigate risks in order to reduce risk to an acceptable level.
For the purposes of Section 417(5) (c) of the Companies Act 2006, the facility agreements with the Group's bankers and Private Placement Note holders are the only contracts or arrangements which the Board considers essential to its business.
Managing our risks
Appropriate risk management aids effective decision making and helps to ensure that the risks the business takes are adequately assessed and challenged. It helps to ensure that the appropriate rewards are achieved whilst retaining our overall resilience to risks.
Our risk management approach looks at risks arising in all parts of the group using both a bottom-up and a top-down approach. A systematic risk management framework and process is used to consider both external factors arising from the environment within which we operate, and internal risks arising from the nature of our business, its controls and processes, and our management decisions. Once identified, the impact and probability of risks are determined with a risk scoring matrix used to ensure that a consistent approach is taken when assessing the overall impact.
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 | Mitigation activities | ||
| Strategy | |||
| The Group develops business plans based on a wide range of variables. Incorrect assumptions about 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 | · The strategy development process draws on internal and external analysis of the self-storage market, emerging customer trends and a range of other factors. · The portfolio is geographically diversified with regular detailed review of performance.
| ||
| Finance risk | |||
| Lack of funding resulting in inability to meet business plans, satisfy liabilities or breach of covenants | · Funding requirements for business plans are reviewed regularly. · 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 monitors financial covenant ratios and headroom closely. · The existing banking facilities run to 30 June 2018 and the US private placement notes mature in six and eleven years. | ||
| Treasury risk | |||
| Adverse currency or interest rate movements | · Guidelines set for our exposure to fixed and floating interest rates and use of interest rate and currency swaps to manage this risk. · Foreign currency denominated assets financed by borrowings in the same currency where appropriate and to the extent possible. | ||
Property investment and development | ||||
Acquisition and development of properties that fail to meet performance expectations Overexposure to developments within a short timeframe | · Thorough due diligence conducted and detailed analysis undertaken prior to Board approval for property investment and development. · The Group's overall exposure to developments is monitored and projects phased. · The performance of individual properties is benchmarked against target returns.
| |||
Valuation risk | ||||
Value of our properties declining as a result of external market or internal management factors | · Independent valuations conducted by external professionally qualified valuers. · A diversified portfolio let to a large number of customers should help to mitigate any negative impact arising from changing conditions in the financial and property market. · Headroom of loan to value banking covenants is maintained and reviewed. | |||
Occupancy risk | ||||
A potential loss of income and increased vacancy due to falling demand, oversupply, or customer default | · Personal and business customers cover a wide range of segments, sectors and geographic territories with limited exposure to any single customer. · Weekly monitoring of occupancy levels and review of pricing at each individual store. · Onsite staff maintains regular contact with customers and local monitoring of competitor offers. · Monitoring of reasons for customers vacating and exit interviews conducted. · The occupancy rate across the portfolio has been maintained through FY2013 due to flexibility offered on deals by in-house marketing and the customer support centre. | |||
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 in place to ensure that the group complies with the appropriate rules and legislation with formal reporting to the Board.
|
| ||
Energy risk |
| |||
Reductions in energy usage are not achieved resulting in excessive costs | · Ongoing upgrading of lighting and heating and review and monitoring of energy consumption. · Full compliance with carbon reduction commitment regulations. |
| ||
Business organisation and human resources |
| |||
Failure to recruit and retain key staff with appropriate skills and calibre | · Recruitment procedures and the remuneration structure are regularly reviewed and benchmarked. · Succession plans are monitored for all senior positions. |
| ||
Business interruption risk |
| |||
Major events mean that the Group is unable to carry out its business for a sustained period | · Business continuity plans in place and tested. · Back-up systems at locations other than head office and remote working capabilities. · Reviews and assessments are undertaken periodically for enhancements to supplement the existing compliant aspects of buildings and processes. |
| ||
Reputational risk |
| |||
Failure to meet customer and external stakeholder expectations
| · Customer surveys undertaken routinely and results acted upon. · Training and mystery shopper initiatives undertaken. · Regular communication with our stakeholders. |
| ||
END
For further information, please contact:
Safestore Holdings plc
Sam Ahmed, Company Secretary Tel: 020 8732 1500
About Safestore:
· Safestore is the UK's largest self storage group with 134 stores. They include 97 wholly owned stores in the UK and 25 wholly owned stores in the Paris region together with 12 stores under management in the UK. |
· The Company provides storage to around 46,500 personal and business customers. |
· Safestore (excluding Space Maker) has a maximum lettable area ("MLA") of 5.08 million sq. ft. (including the expansion pipeline stores) of which 3.32 million sq. ft. is currently occupied. |
· Safestore employs around 550 people. |