Fourth Quarter Trading Update

RNS Number : 6331W
Safestore Holdings plc
16 November 2017
 

16 November 2017

 

Safestore Holdings plc


Fourth quarter trading update for the period 1 August 2017 to 31 October 2017

 

Solid Q4 completes another strong year

 

 

Group Operating Performance- total

Q4 2017

Q4 20162

Change

Change- CER1

Revenue (£'m)

34.4

32.8

4.9%

4.1%

Revenue- full year (£'m)

129.9

115.4

12.6%

10.0%

Closing Occupancy (let sq ft- million)3

4.14

3.97

4.3%

n/a

Maximum Lettable Area (MLA)4

5.71

5.59

2.1%

n/a

Closing Occupancy (% of MLA)

72.6%

71.0%

+1.6ppts

n/a

Average Storage Rate (£)

26.94

26.78

0.6%

(0.4%)

Average Storage Rate (£)- full year

26.67

26.17

1.9%

(0.6%)

 

Group Operating Performance- like-for-like5

Q4 2017

Q4 20162

Change

Change- CER1

Revenue- (£'m)

31.2

30.0

4.0%

2.8%

Revenue- full year (£'m)

117.7

111.1

5.9%

3.3%

Closing Occupancy- (let sq ft- million)3

3.65

3.59

1.7%

n/a

Closing Occupancy- (% of MLA)

75.0%

73.7%

+1.3ppts

n/a

Average occupancy- full year (let sq ft- million)

3.57

3.52

1.4%

n/a

Average Storage Rate (£)

27.79

27.27

1.9%

0.8%

Average Storage Rate (£)- full year

27.35

26.26

4.2%

1.3%

 

 

Highlights

·      Group revenue for the year in CER1 up 10.0%

·      Like-for-like5 Group revenue for the year in CER1 up 3.3%

UK up 3.1%

Paris up 4.0%

·      Balanced approach to revenue management continues to drive returns

Like-for-like average occupancy for the year up 1.4%

Like-for-like closing occupancy of 75.0% (up 1.3ppts on Q4 2016)

Like-for-like average storage rate for the year up 1.3% in CER1

·      Freehold site acquired at Merry Hill, west of Birmingham for a 55,000 sq ft store, subject to planning

·      Cash Tax Adjusted Earnings per Share6 for the year ended 31 October 2017 is expected to be slightly ahead of consensus7

 

 

Frederic Vecchioli, Chief Executive Officer commented:

 

"We have had a good final quarter and a successful year, through a combination of organic and acquisitive growth combined with a strong operational performance. Over the last 18 months our market leading positions in the UK and Paris have been consolidated, supported by the acquisitions of Space Maker and Alligator Self Storage, which added 24 stores to the UK portfolio and boosted earnings from the outset. Organically we have developed and opened six new stores in the UK and Paris, with a pipeline of a further three new stores opening in London and Birmingham.

 

"The refinancing of our borrowings earlier in the year has resulted in a strengthened, efficient, low cost balance sheet which gives us the flexibility to continue to target selected development and acquisition opportunities.

 

"We enter the new financial year in a strong position with substantial growth potential from the integration of Alligator Self Storage and the development of three new sites. However, our priority and the largest opportunity remains the significant upside from our 1.6m square feet of invested unlet space. We remain confident in the future and focused on the continued delivery of value to all shareholders."

 

 

Safestore will be issuing its Preliminary Results for the year ended 31 October 2017 on Tuesday, 9 January 2018.

 

 

Business highlights

 

UK Trading Performance

 

UK Operating Performance- total

Q4 2017

Q4 20162

Change

Revenue (£'m)

25.5

24.7

3.2%

Revenue- full year (£'m)

97.5

87.4

11.6%

Closing Occupancy- (let sq ft- million)3

3.25

3.15

3.2%

Maximum Lettable Area (MLA)4

4.54

4.52

0.4%

Closing Occupancy (% of MLA)

71.6%

69.7%

+1.9ppts

Average Storage Rate (£)

24.37

24.47

(0.4%)

Average Storage Rate (£)- full year

24.42

24.60

(0.7%)

 

UK Operating Performance- like-for-like5

Q4 2017

Q4 20162

Change

Revenue (£'m)

22.5

21.9

2.7%

Revenue- full year (£'m)

85.7

83.1

3.1%

Closing Occupancy- (let sq ft- million)3

2.79

2.77

0.7%

Closing Occupancy- (% of MLA)

72.5%

71.9%

+0.6ppts

Average occupancy- full year (let sq ft- million)

2.75

2.71

1.5%

Average Storage Rate (£)

24.92

24.78

0.6%

Average Storage Rate (£)- full year

24.88

24.65

0.9%

 

The UK has performed well over the year resulting in revenue growing by 11.6%. This performance reflects the full year contribution from the acquisition of Space Maker in July 2016 as well as the impact of the new stores opened in Wandsworth, Chiswick, Birmingham and Altrincham, offset by the closure of Deptford and our old Birmingham Central store. The new store openings and Space Maker have performed in line with or slightly ahead of their business plans.

 

On a like-for-like basis full year revenue grew by 3.1%. Average occupancy over the year was up 1.5% with closing occupancy at 72.5%, up 0.6ppts. Average rate grew by 0.9% over the year with the fourth quarter rate returning to growth at 0.6% year-on-year after a flat third quarter. Sequentially, the fourth quarter rate was up 2.8% on the third quarter.

 

The previously announced acquisition of Alligator Self Storage became effective from 1 November 2017 and will therefore only impact future periods. Further details of this acquisition are included in our announcement of 25 September 2017.

 

In addition, in October 2017, we completed the acquisition of a 1.34 acre industrial site at Merry Hill, around ten miles west of the centre of Birmingham close to a major regional shopping centre. Subject to receiving planning consent we expect to open a purpose-built freehold 55,000 sq ft store in the first quarter of 2019.

 

 

Paris Trading Performance

 

Paris Operating Performance- total

Q4 2017

Q4 20162

Change

Revenue (€'m)

9.9

9.3

6.5%

Revenue- full year (€'m)

37.2

35.4

5.1%

Closing Occupancy (let sq ft- million)3

0.89

0.82

8.5%

Maximum Lettable Area (MLA)4

1.17

1.07

9.3%

Closing Occupancy (% of MLA)

76.6%

76.3%

0.3ppts

Average Storage Rate (€)

40.53

41.08

(1.3%)

Average Storage Rate (€)- full year

40.28

39.85

1.1%

Revenue (£'m)

8.9

8.1

9.9%

Revenue- full year (£'m)

32.4

28.0

15.7%

 

Paris Operating Performance- like-for-like5

Q4 2017

Q4 20162

Change

Revenue (€'m)

9.7

9.3

4.3%

Revenue- full year (€'m)

36.8

35.4

4.0%

Closing Occupancy- (let sq ft- million)3

0.86

0.82

4.9%

Closing Occupancy- (% of MLA)

84.7%

80.7%

+4.0ppts

Average occupancy- full year (let sq ft- million)

0.82

0.81

1.2%

Average Storage Rate (€)

41.44

41.11

0.8%

Average Storage Rate (€)- full year

40.75

39.85

2.3%

Revenue (£'m)

8.7

8.1

7.4%

Revenue- full year (£'m)

32.0

28.0

14.3%

 

 

Our Paris business had a further strong quarter growing total revenue by 6.5% resulting in 5.1% growth for the full year. Our new stores at Emerainville and Combs-la-Ville are performing well and contribute to the total revenue figures. However, the immaturity of these stores has had a dilutive effect on the closing occupancy (% of MLA) and the average rate.

 

Like-for-like revenue grew by 4.3% in the quarter and delivered 4.0% growth for the full year. The impact of the weakening of Sterling in the period resulted in the Sterling equivalent like-for-like revenue growing by 7.4% in the quarter and 14.3% for the full year.

 

Our like-for-like occupancy performance was strong for the year with closing occupancy at 84.7%, up 4.0ppts compared to 2016. Pricing was robust and our like-for-like average rate was up 0.8% year-on-year in the quarter, reflecting a very strong performance in the same quarter in the previous year and, for the full year, grew by 2.3% compared to 2016.

 

As ever, 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

 

In the last 18 months Safestore has further strengthened its market positions in both the UK and Paris with the acquisitions of Space Maker and Alligator, the opening of six new stores and the establishment of a pipeline of a further three new stores. The Group has 1.6m square feet of fully invested unlet space available offering significant operational upside in the existing portfolio. We remain focused on further optimising the Group's operational performance whilst our balance sheet strength and flexibility provides us with the opportunity to actively consider further selective development and acquisition opportunities in our key markets.

 

We believe Safestore is well placed to withstand the uncertain macroeconomic backdrop in the UK. We have seen some positive trends in the final quarter in relation to enquiry growth and rate in the UK. The Group has the benefit of operating in two countries and, in Paris, momentum has been strong in the second half of the year. As a result we expect cash tax adjusted earnings per share6 to be slightly ahead of consensus7 for the year ended 31 October 2017 and we look forward with confidence to the 2017/18 financial year.

 

Ends

 

1 - CER is Constant Exchange Rates (Euro denominated results for the current period have been retranslated at the exchange rate effective for the comparative period, in order to present the reported results on a more comparable basis).

2 - Q4 2016 is the quarter ended 31 October 2016.

3 - Occupancy excludes offices but includes bulk tenancy. As at 31 October 2017, closing occupancy includes 27,000 sq ft of bulk tenancy (31 October 2016: 37,000 sq ft).

4 - MLA is Maximum Lettable Area.

5 - Like-for-like information includes only those stores which have been open throughout both the current and prior financial years, with adjustments made to remove the impact of new and closed stores, as well as corporate transactions.

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 nine analysts, the consensus for cash tax adjusted earnings per share for the year ended 31 October 2017 is 22.4p.

 

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

020 7457 2020

Mark Reed

Guy Scarborough

 

 

 

Notes to editors:

 

·      Safestore is the UK's largest self-storage group with 146 stores (including the Alligator stores acquired on 1 November 2017), comprising 120 wholly owned stores in the UK (including 67 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool and Bristol) and 26 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 index in October 2015.

 

·      The Group, including Alligator, provides storage to around 60,000 personal and business customers.

 

·      As at 31 October 2017, Safestore had a maximum lettable area ("MLA") of 5.71 million sq ft (excluding the expansion pipeline stores and Alligator) of which 4.14 million sq ft was occupied.

 

·      Safestore employs around 600 people in the UK and France.


This information is provided by RNS
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