RNS Number : 4197F

Safestore Holdings plc

12 November 2015

12 November 2015

Safestore Holdings plc
Fourth quarter trading update for the period 1 August 2015 to 31 October 2015

Strong Q4 completes successful year, earnings to exceed expectations

Group Operating Performance
Q4 2015
Q4 20142
Change
Change- CER1
Revenue- like-for-like (£'m)3
27.5
25.4
8.3%
10.8%
Revenue (£'m)
27.7
26.1
6.1%
8.3%
Revenue- like-for-like full year (£'m)3
103.0
94.6
8.9%
11.5%
Revenue- full year (£'m)
104.8
97.9
7.0%
9.7%
Closing Occupancy- like-for-like3(let sq ft- million)4
3.58
3.38
5.9%
n/a
Closing Occupancy (let sq ft- million)4
3.58
3.46
3.5%
n/a
Closing Occupancy (% of MLA)5
72.6%
68.8%
+3.8ppts
n/a
Average Storage Rate (£)
25.14
24.65
2.0%
4.4%
Average Storage Rate (£)- full year
24.85
24.24
2.5%
5.4%

Highlights

· Like-for-like3Group revenue for Q4 2015 in CER1up 10.8% on Q4 2014 with good performances across the business

o UK up 11.6%

o Paris up 8.5%

· Continued operational progress driving new lets leading to Group closing occupancy4of 72.6% (up 3.8 ppts on Q4 2014)

· Group average storage rate up 5.4% in CER1in the year driven by strong UK performance (+6.7%)

· Cash Tax Adjusted Earnings per Share6likely to be slightly ahead of the top end of the consensus range7

Frederic Vecchioli, Chief Executive Officer commented:

'This strong final quarter completes another successful year for the Group which has culminated in our recent elevation to the FTSE250. The operational initiatives implemented over the last two years continue to drive our financial performance and it is now likely that we will report cash tax adjusted earnings per share slightly ahead of the top end of consensus7for the full year.

As we enter the new financial year, we remain focused on the significant opportunity represented by our 1.4m square feet of currently unlet space. In addition, we have the balance sheet capacity and flexibility to take advantage of carefully selected development and acquisition opportunities and look forward to the opening of two new freehold stores in London, in Chiswick and Wandsworth, and a freehold flagship store in Birmingham.'

Business highlights

UK Trading Performance

UK Operating Performance
Q4 2015
Q4 20142
Change
Revenue- like-for-like (£'m)3
21.1
18.9
11.6%
Revenue (£'m)
21.2
19.6
8.2%
Revenue- like-for-like full year (£'m)3
78.1
69.0
13.2%
Revenue- full year (£'m)
79.9
71.8
11.3%
Closing Occupancy- like-for-like3(let sq ft- million)4
2.76
2.60
6.2%
Closing Occupancy (let sq ft- million)4
2.76
2.68
3.0%
Closing Occupancy (% of MLA)5
70.2%
66.6%
+3.6ppts
Average Storage Rate (£)
24.13
22.94
5.2%
Average Storage Rate (£)- full year
23.70
22.21
6.7%

The UK business enjoyed a strong final quarter growing like-for-like revenue by 11.6%. For the full year, 13.2% like-for-like revenue growth was achieved despite having annualised a number of the operational and pricing initiatives taken in the first half of the previous year.

Our new lets increased by 7.9% in the quarter, offset by the usual seasonal increase in vacates, and 18.6% for the full year reflecting good customer enquiry growth and continued improving conversion performance in our stores.

The increase in occupancy of 76,000 sq ft (2014: 125,000 sq ft) over the year was despite the planned closures of Whitechapel and New Malden which had combined occupancy of 85,000 sq ft at October 2014. Overall, UK closing occupancy grew by 3.6 percentage points to 70.2% (2014: 66.6%).

After we annualised the pricing policy changes made in the first half of the prior year, we expected the pricing momentum to slow down. However, our average rate for the quarter remained strong and was up 5.2% year-on-year and up 6.7% for the full year. Sequentially, our Q4 average rate was 2.3% higher than the rate achieved in Q3 2015.

We continued our programme of active and effective portfolio management in the quarter with the agreement of a 20 year lease extension combined with a 12 month rent-free period at our Warrington store. We estimate that this renegotiation will add c. £1.6m to the property portfolio valuation. During the current financial year we have extended the leases on six of our stores and since 2012, 53% of our leases have been extended adding value to the balance sheet whilst improving the secured tenure of our portfolio for the longer term.

Work has commenced on our development sites and we look forward to the opening of new stores over the coming year in London (Chiswick and Wandsworth) and, having now received planning permission, in Birmingham.

Paris Trading Performance

Paris Operating Performance
Q4 2015
Q4 20142
Change
Revenue- like-for-like (€'m)3
8.9
8.2
8.5%
Revenue (€'m)
8.9
8.3
7.2%
Revenue- like-for-like full year (€'m)3
33.7
31.5
7.0%
Revenue- full year (€'m)
33.7
32.1
5.0%
Closing Occupancy (let sq ft- million)4
0.83
0.78
6.4%
Closing Occupancy (% of MLA)5
81.8%
77.2%
+4.6ppts
Average Storage Rate (€)
39.19
38.43
2.0%
Average Storage Rate (€)- full year
38.94
38.01
2.4%
Revenue (£'m)
6.5
6.5
=
Revenue (£'m)- full year (£'m)
24.9
26.1
(4.6%)

Our Paris business had another strong quarter growing like-for-like revenue by 8.5% in CER1. The impact of the significant weakening of the Euro in the period resulted in the Sterling equivalent like-for-like revenue being in line with Q4 2014. For the full year, like-for-like revenue was up 7.0% in CER1but 4.6% behind the prior year in the Sterling equivalent. This currency impact is partially offset by the benefits of our current Euro hedging arrangements which benefit the EBITDA line when reported in Sterling.

Improving enquiries and a consistent conversion performance resulted in 10.1% year-on-year growth in new lets in the quarter driving a good occupancy performance in Paris. The business grew occupancy by 10,000 sq ft since the end of Q3 resulting in closing occupancy of 81.8%, up 4.6 percentage points compared to the prior year.

Pricing was robust and our average rate was up 2.0% year-on-year in the quarter and, in absolute terms, was 1.6% ahead of our Q3 2015 rate. For the full year the average rate grew by 2.4% compared to 2014.

We continue to pursue our proven strategy of growing the revenue of our market leading Parisian portfolio by achieving an appropriate balance of rate and occupancy growth.

Outlook

Safestore has strong market positions in both the UK and Paris and, with 1.4m square feet of unlet space available, there remains significant operational upside in the existing portfolio. In addition, our planned new freehold stores at Chiswick, Wandsworth and Birmingham will further strengthen our London and regional UK market positions over the next year. We remain focused on further improving the operational performance of the business and our balance sheet flexibility also provides us with the opportunity to consider further selective development and acquisition opportunities in our key markets.

Ends

1 - 'CER' is Constant Exchange Rate

2 - Q4 2014 is the quarter ended 31 October 2014

3 - Like-for-like adjustments have been made to remove the impact of the closure of St Denis Landy in Paris in 2014, and the 2015 closures of New Malden and Whitechapel in the UK

4 - Closing occupancy excludes offices but includes 64,022 sq ft of bulk tenancy as at 31 October 2015 (31 October 2014 83,472 sq ft)

5 - MLA is Maximum Lettable Area. Group MLA has been adjusted to 4.93m sq ft following the closure of New Malden in July 2015 and Whitechapel in October 2015, an extension at Edinburgh Fort Kinnaird and sundry minor adjustments in other stores

6 - Cash tax adjusted earnings per share is defined as Profit or Loss for the year before exceptional items, change in fair value of derivatives, profit or loss on investment properties and the associated tax impacts as well as exceptional tax items and deferred tax charges

7 - As of today's date, based on the forecasts of 8 analysts, the consensus range for cash tax adjusted earnings per share for the year ended October 2015 is 15.6p to 16.1p

Enquiries

Safestore Holdings plc
020 8732 1500
Frederic Vecchioli, Chief Executive Officer
Andy Jones, Chief Financial Officer
www.safestore.com
Instinctif Partners
020 7457 2020
Mark Reed
Guy Scarborough

Notes to editors:

·
Safestore is the UK's largest self-storage group with 119 stores, comprising 95 wholly owned stores in the UK (including 56 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool and Bristol) and 24 wholly owned stores in the Paris region. In addition, Safestore has 12 Space Maker stores under management in the UK.
·
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 in October 2015.
·
The Group provides storage to around 48,000 personal and business customers.
·
Safestore (excluding Space Maker) has a maximum lettable area ('MLA') of 4.93 million sq ft (excluding the expansion pipeline stores) of which 3.58 million sq ft is currently occupied.
·
Safestore employs around 525 people in the UK and France.

This information is provided by RNS

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