Safestore Holdings plc Q4 Trading Update (3856P)

TIDMSAFE

RNS Number : 3856P

Safestore Holdings plc

17 November 2016

Safestore Holdings plc

Fourth quarter trading update for the period 1 August 2016 to 31 October 2016

A robust trading performance concludes a strong year

 
 Group Operating Performance-     Q4     Q4 2015(2)    Change    Change- 
  like-for-like(3)                2016                            CER(1) 
------------------------------  ------  -----------  ---------  -------- 
 Revenue- (GBP'm)                30.3       27.4       10.6%      5.8% 
------------------------------  ------  -----------  ---------  -------- 
 Revenue- full year (GBP'm)      112.5     102.3       10.0%      8.1% 
------------------------------  ------  -----------  ---------  -------- 
 Closing Occupancy- (let 
  sq ft- million) (4)            3.61       3.56        1.4%       n/a 
------------------------------  ------  -----------  ---------  -------- 
 Closing Occupancy- (% 
  of MLA)                        73.7%     72.7%      +1.0ppts     n/a 
------------------------------  ------  -----------  ---------  -------- 
 Average occupancy- full 
  year (let sq ft- million)      3.54       3.42        3.5%       n/a 
------------------------------  ------  -----------  ---------  -------- 
 Average Storage Rate 
  (GBP)                          27.31     25.11        8.8%      3.5% 
------------------------------  ------  -----------  ---------  -------- 
 Average Storage Rate 
  (GBP)- full year               26.31     24.85        5.9%      3.9% 
------------------------------  ------  -----------  ---------  -------- 
 
 Group Operating Performance-     Q4     Q4 2015(2)    Change    Change- 
  total                           2016                            CER(1) 
------------------------------  ------  -----------  ---------  -------- 
 Revenue (GBP'm)                 32.8       27.7       18.4%      13.8% 
------------------------------  ------  -----------  ---------  -------- 
 Revenue- full year (GBP'm)      115.4     104.8       10.1%      8.3% 
------------------------------  ------  -----------  ---------  -------- 
 Closing Occupancy (let 
  sq ft- million) (4)            3.97       3.58       10.9%       n/a 
------------------------------  ------  -----------  ---------  -------- 
 Maximum Lettable Area 
  (MLA) (5)                      5.59       4.93       13.4%       n/a 
------------------------------  ------  -----------  ---------  -------- 
 Closing Occupancy (% 
  of MLA)                        71.0%     72.6%      -1.6ppts     n/a 
------------------------------  ------  -----------  ---------  -------- 
 Average Storage Rate 
  (GBP)                          26.78     25.14        6.5%      1.8% 
------------------------------  ------  -----------  ---------  -------- 
 Average Storage Rate 
  (GBP)- full year               26.17     24.85        5.3%      3.3% 
------------------------------  ------  -----------  ---------  -------- 
 

Highlights

   --      Group revenue for the year in CER(1) up 13.8% 

-- Like-for-like(3) Group revenue for the year in CER(1) up 8.1% with good performances across the business

o UK up 9.2%

o Paris up 5.0%

   --      Balanced approach to revenue management 

o Like-for-like average occupancy for the year up 3.5%

o Like-for-like closing occupancy(4) of 73.7% (up 1.0 ppts on Q4 2015)

o Like-for-like average storage rate up 3.9% in CER(1)

-- Cash Tax Adjusted Earnings per Share(6) for the year ended 31 October 2016 is expected to be at the top end of the consensus range(7)

Frederic Vecchioli, Chief Executive Officer commented:

"The Group has had a strong financial year, consolidating the improvements made to its operating performance over the last three years. We have also strengthened our market leading positions in the UK and Paris with the acquisition of Space Maker and the opening of five new stores around the end of the financial year. As a result, we expect that our full year Cash Tax Adjusted Earnings per Share(6) will be at the top end of the consensus range(7) .

"As we enter the new financial year, we remain focused on the significant opportunity represented by our 1.6m square feet of currently unlet space. In addition, our balance sheet capacity and flexibility allows us to continue to seek selected development and acquisition opportunities."

Safestore will be issuing its Preliminary Results for the year ended 31 October 2016 on Monday, 9 January 2017.

Business highlights

UK Trading Performance

 
 UK Operating Performance-     Q4 2016   Q4 2015(2)    Change 
  like-for-like(3) 
----------------------------  --------  -----------  --------- 
 Revenue (GBP'm)                22.2        20.9        6.2% 
----------------------------  --------  -----------  --------- 
 Revenue- full year (GBP'm)     84.5        77.4        9.2% 
----------------------------  --------  -----------  --------- 
 Closing Occupancy- (let 
  sq ft- million) (4)           2.79        2.73        2.2% 
----------------------------  --------  -----------  --------- 
 Closing Occupancy- (% 
  of MLA)                       71.8%      70.4%      +1.4ppts 
----------------------------  --------  -----------  --------- 
 Average occupancy- full 
  year (let sq ft- million)     2.73        2.63        3.8% 
----------------------------  --------  -----------  --------- 
 Average Storage Rate 
  (GBP)                         24.85      24.09        3.2% 
----------------------------  --------  -----------  --------- 
 Average Storage Rate 
  (GBP)- full year              24.73      23.66        4.5% 
----------------------------  --------  -----------  --------- 
 
 UK Operating Performance-     Q4 2016   Q4 2015(2)    Change 
  total 
----------------------------  --------  -----------  --------- 
 Revenue (GBP'm)                24.7        21.2       16.5% 
----------------------------  --------  -----------  --------- 
 Revenue- full year (GBP'm)     87.4        79.9        9.4% 
----------------------------  --------  -----------  --------- 
 Closing Occupancy- (let 
  sq ft- million) (4)           3.15        2.76       14.1% 
----------------------------  --------  -----------  --------- 
 Maximum Lettable Area 
  (MLA) (5)                     4.52        3.92       15.3% 
----------------------------  --------  -----------  --------- 
 Closing Occupancy (% 
  of MLA)                       69.7%      70.2%      -0.5ppts 
----------------------------  --------  -----------  --------- 
 Average Storage Rate 
  (GBP)                         24.47      24.13        1.4% 
----------------------------  --------  -----------  --------- 
 Average Storage Rate 
  (GBP)- full year              24.60      23.70        3.8% 
----------------------------  --------  -----------  --------- 
 

The UK has delivered another strong year growing revenue by 9.4%. The acquisition of Space Maker on 29 July 2016 has contributed to this growth but is offset by the closures of Whitechapel and New Malden in the previous year so, on a like-for-like basis, revenue grew by 9.2% in the year. Our first quarter's ownership of the Space Maker portfolio has gone to plan with the business fully integrated into the Group from an operational perspective and the rebranding of the stores well advanced.

Like-for-like new lets increased by 4.9% in the quarter, offset by the usual seasonal increase in vacates, and 7.6% for the full year reflecting good customer enquiry growth, helped by our new website, and consistent conversion performance in our stores.

Total occupancy grew by 397,000 sq ft (2015: 76,000 sq ft) over the year reflecting the acquisition of Space Maker and a net like-for-like occupancy growth of 57,000 sq ft which comprised an 84,000 sq ft underlying increase in occupancy partially offset by a planned 27,000 sq ft reduction in the lower yielding discounted bulk occupancy. The addition of three new stores in the last two months of the year (Wandsworth, Birmingham and Altrincham) diluted total closing occupancy which ended the year at 69.7% (2015: 70.2%) but like-for-like closing occupancy grew by 1.4ppts to 71.8% (2015: 70.4%). Like-for-like average occupancy for the year grew by 3.8%.

We take a balanced approach to revenue management and our occupancy growth was accompanied by a 4.5% increase in the like-for-like average storage rate for the year. Sequentially, our Q4 like-for-like average rate was 2.2% higher than the rate achieved in Q3 2016.

We opened three new stores towards the end of the financial year in Wandsworth, Altrincham and Birmingham (and closed our existing Birmingham Central store) and our Chiswick store opened on 4 November 2016. In addition, we completed the extension of our Acton store. These developments were completed on time and on budget and add c. 135,000 sq ft of net new space to our portfolio. Early trading at these sites has been encouraging and in line with management's expectations. The Group now operates 109 wholly owned stores in the UK.

Paris Trading Performance

 
 Paris Operating Performance-    Q4 2016   Q4 2015(2)    Change 
  like-for-like(3) 
------------------------------  --------  -----------  --------- 
 Revenue (EUR'm)                   9.3        8.9         4.5% 
------------------------------  --------  -----------  --------- 
 Revenue- full year (EUR'm)       35.4        33.7        5.0% 
------------------------------  --------  -----------  --------- 
 Closing Occupancy- (let 
  sq ft- million) (4)             0.82        0.83       -1.2% 
------------------------------  --------  -----------  --------- 
 Closing Occupancy- (% 
  of MLA)                         80.7%      81.8%      -1.1ppts 
------------------------------  --------  -----------  --------- 
 Average occupancy- full 
  year (let sq ft- million)       0.81        0.79        2.5% 
------------------------------  --------  -----------  --------- 
 Average Storage Rate 
  (EUR)                           41.11      39.19        4.9% 
------------------------------  --------  -----------  --------- 
 Average Storage Rate 

  (EUR)- full year                39.85      38.94        2.3% 
------------------------------  --------  -----------  --------- 
 Revenue (GBP'm)                   8.1        6.5        24.6% 
------------------------------  --------  -----------  --------- 
 Revenue- full year (GBP'm)       28.0        24.9       12.4% 
------------------------------  --------  -----------  --------- 
 
 Paris Operating Performance-    Q4 2016   Q4 2015(2)    Change 
  total 
------------------------------  --------  -----------  --------- 
 Revenue (EUR'm)                   9.3        8.9         4.5% 
------------------------------  --------  -----------  --------- 
 Revenue- full year (EUR'm)       35.4        33.7        5.0% 
------------------------------  --------  -----------  --------- 
 Closing Occupancy (let 
  sq ft- million) (4)             0.82        0.83       -1.2% 
------------------------------  --------  -----------  --------- 
 Maximum Lettable Area 
  (MLA) (5)                       1.07        1.01        5.9% 
------------------------------  --------  -----------  --------- 
 Closing Occupancy (% 
  of MLA)                         76.3%      81.8%      -5.5ppts 
------------------------------  --------  -----------  --------- 
 Average Storage Rate 
  (EUR)                           41.08      39.19        4.8% 
------------------------------  --------  -----------  --------- 
 Average Storage Rate 
  (EUR)- full year                39.85      38.94        2.3% 
------------------------------  --------  -----------  --------- 
 Revenue (GBP'm)                   8.1        6.5        24.6% 
------------------------------  --------  -----------  --------- 
 Revenue- full year (GBP'm)       28.0        24.9       12.4% 
------------------------------  --------  -----------  --------- 
 

Our Paris business had a solid quarter growing like-for-like revenue by 4.5% and delivered 5.0% growth for the full year. The impact of the significant weakening of Sterling in the period resulted in the Sterling equivalent like-for-like revenue growing by 24.6% in the quarter and 12.4% for the full year.

Pricing was robust and our like-for-like average rate was up 4.9% year-on-year in the quarter and, for the full year, grew by 2.3% compared to 2015. Like-for-like closing occupancy ended the year at 80.7% (2015: 81.8%). Our average occupancy for the year was up 2.5% on 2015.

Our new store at Emerainville in the east of Paris opened on time and on budget at the end of the financial year adding 60,000 sq ft of MLA to our portfolio. Given that the store has only recently started to trade, its opening has a dilutive effect on total closing occupancy. The extension of our Longpont store, which will add 22,600 sq ft of new space, is due to be completed in December 2016.

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 strengthened its market positions in both the UK and Paris with the acquisition of Space Maker, the addition of five new stores and the imminent completion of our two store extensions. Accordingly the Group has 1.6m square feet of unlet space available representing significant operational upside in the existing portfolio. We remain focused on further optimising the Group's operational performance and our balance sheet strength and flexibility provides us with the opportunity to actively consider further selective development and acquisition opportunities in our key markets.

Ends

1 - CER is Constant Exchange Rate

2 - Q4 2015 is the quarter ended 31 October 2015

3 - Like-for-like adjustments have been made to remove the impact of the closure of Whitechapel and New Malden in 2015, and the 2016 openings of Wandsworth, Altrincham, Birmingham (including closure of our existing Birmingham store) and Emerainville. In addition, the impact of the acquisition of Space Maker on 29 July 2016 has been adjusted.

4 - Occupancy excludes offices but includes bulk tenancy. As at 31 October 2016, closing occupancy includes 37,000 sq ft of bulk tenancy (31 October 2015: 64,000 sq ft)

5 - MLA is Maximum Lettable Area. Group MLA has been adjusted to 5.59m sq ft (2015: 4.93m) following the acquisition of Space Maker and the openings of Wandsworth, Altrincham, Birmingham and Emerainville.

6 - Cash tax adjusted earnings per share is defined as profit or loss for the year before exceptional items, 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 charges, divided by the weighted average number of shares in issue (excluding shares held by the Safestore Employee Benefit Trust)

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 31 October 2016 is 17.6p to 19.5p

This announcement contains inside information.

Enquiries

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

Notes to editors:

 
 --   Safestore is the UK's largest self-storage group with 134 stores (including Chiswick which 
       opened on 4 November 2016), comprising 109 wholly owned stores in the UK (including 63 in 
       London and the South East with the remainder in key metropolitan areas such as Manchester, 
       Birmingham, Glasgow, Edinburgh, Liverpool and Bristol) and 25 wholly owned stores in the Paris 
       region. 
 --   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 55,000 personal and business customers. 
 --   Safestore has a maximum lettable area ("MLA") of 5.64 million sq ft (including Chiswick which 
       opened on 4 November 2016). At 31 October 2016, 3.97 million sq ft was occupied. 
 --   Safestore employs around 600 people in the UK and France. 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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November 17, 2016 02:00 ET (07:00 GMT)