Trading Update

RNS Number : 8607S

Safestore Holdings plc

13 November 2013

 



13 November 2013

Safestore Holdings plc
Pre-close trading update for the year ended 31 October 2013

Trading in line, Sale of Whitechapel, Chairman Succession

Safestore Holdings plc ("Safestore" or "the Company"), a leading self-storage operator in the UK and Paris, is pleased to report on its trading progress (unaudited) for the fourth quarter ("Q4 2013") and the year ended 31 October 2013.

Key Measures

		Reported Currency			In CER1
		2013	20122	Change	Change
		£ million	£ million	%	%
Q4 revenue		24.8	25.4	-2.7%	-4.3%
Full Year revenue		96.1	98.8	-2.8%	-3.6%
		£	£	%	%
Q4 RevPAF3		19.35	19.69	-1.7%	-3.3%

Headlines

·      On course to meet full year expectations and return to growth for 2013/14

·      UK Gross Transaction Value up 8.4% for the year

·      Further progress on strategic initiatives with national accounts now 10% of UK occupancy

·      French business continues to perform well, growing occupancy, rate and revenue

·      Sale of Whitechapel site completed for £41.1m⁶, £14.6m above book value⁵

·      Richard Grainger to be succeeded as Chairman by Alan Lewis

Frederic Vecchioli, Chief Executive Officer commented:

"The UK business has now come through the first full year of the imposition of VAT in good shape, demonstrating strong demand and our ability to flex the cost structure to limit the impact on profitability, which remains on-course to meet the Board's full year expectations. Our French business has continued to perform very well throughout the year in a difficult economic climate and I am optimistic that our strong position in the Parisian market will enable this to continue.

After two months as Chief Executive, I am pleased to announce the sale of Whitechapel and am confident that the Group is well placed to return to growth in 2014 through the continued execution of the Group's stated strategy. With occupancy on an improving trend and our on-going focus on cost control, the Group is well positioned to exploit an improving economic backdrop."

Operational Headlines

UK - a resilient performance

2012/13 has been impacted by the UK Government's imposition of VAT on self-storage from 1 October 2012. Over the year, gross transaction value on self-storage revenues (including the 20% VAT element) was up 8.4% on the previous year, demonstrating the continuing resilience of the business model. However, after taking into account the VAT payable, total revenue for the UK was down 6.9% for Q4 2013 and is down 6.2% or £4.7m for the full year. This performance is slightly better than our initial guidance, provided in June 2012, for a £5-6m full year reduction in revenue arising from the imposition of VAT.

In our business, it is typical to see a quarter-on-quarter reduction in occupancy in Q4, as the peak summer season comes to a close. As expected, in Q4 2013, occupancy decreased by 27,000 sq ft, bringing closing occupancy⁴ to 2.56m sq ft or 63.5% of our Maximum Lettable Area ("MLA") ⁷. This represented an improvement of 123,000 sq ft as compared to Q4 2012 when significant vacates followed the introduction of VAT on self-storage. As a result, occupancy is 1.6 percentage points ahead of Q4 2012 (61.9%).

The average self-storage rate in the UK for the quarter was £21.97 which is 7.3% down on Q4 2012 but represents a 2.0% improvement in the rate achieved during Q3 2013. RevPAF in the UK was £17.80 for the quarter, down 5.3% on the prior year but 4.5% ahead of our Q3 2013 position.

Our National Accounts business continues to grow and UK occupancy is now 32% higher than at Q4 2012 with c. 265,000 sq ft let. This represents over 10% of UK occupancy.

Finally, control of our cost base remains a strong focus and over the full year we have delivered significant year-on-year cost savings, partially mitigating the revenue impact from the imposition of VAT.

France - continued strong performance growing revenue, rate and occupancy

Our French business continued its strong year-to-date trading performance into Q4. The increasing maturity of stores opened in 2012, as well as underlying organic growth, has driven a 4.2% revenue increase over Q4 2012 in constant exchange rates which equates to a 10.9% increase in sterling, reflecting a strengthening in the euro exchange rate.

French RevPAF was €29.71 in the quarter, up 2.4% on the same period last year. Occupancy increased by 3,000 sq ft in the quarter, increasing closing occupancy to 0.76m sq ft or 71.9% of MLA⁴ at 31 October 2013, up 0.2 percentage points compared to the Q3 2013 position (71.7%) and up 0.3 percentage points compared to 31 October 2012 (71.6%). The average self-storage rate per sq ft for Q4 2013 in Paris was €37.76, 3.0% higher than the same period last year.

Asset Management - sale of Whitechapel

We are pleased to announce the completion of the sale of our Whitechapel site to London and Quadrant ("L&Q"), on an unconditional basis, for £41.1m. This represents a premium of £14.6m over the April 2013 book value of £26.5m.

Under the terms of the sale, Safestore will continue to operate its self-storage business from the site until November 2015 under a leaseback from L&Q at a peppercorn rent and thus benefit from the self-storage income generated during that period from the site, which generated total EBITDA of £2.2m during the year ended 31 October 2012. During this period we intend to seek alternative premises which, together with our other sites in London, would provide our customers with suitable alternative storage arrangements. L&Q plan to develop the site for primarily residential purposes.

The sale of Whitechapel will provide the Group with greater balance sheet flexibility, and is in-line with the Group's stated active asset management strategy.  This disposal further underpins the valuation of our overall estate and we continue to assess opportunities to enhance asset value.

Directorate Change - Alan Lewis succeeds Richard Grainger as Chairman

The Board of Safestore announces the appointment of Alan Lewis as Non-Executive Chairman of the Group with effect from 1 January 2014, following Richard Grainger's decision to step down from the role that he has held for the past five and a half years.

Richard Grainger commented "It has been a pleasure to lead Safestore. It is a great business, which is seeing improving trends after successfully coming through the imposition of VAT. The strategy is now firmly in place, with a fully refreshed top team looking forward to realising the Group's exciting future opportunities."

Alan Lewis' appointment provides continuity having been a Non-Executive Director of Safestore since June 2009. He is also Chairman of Porterbrook and National Friendly and has recently stepped down from the Chairman's role at Leeds Bradford Airport. Previously Alan has had a highly successful career spanning 30 years in private equity, primarily at Bridgepoint, where he was one of the founding partners.

Alan Lewis commented "I'd like to thank Richard for his significant contribution as Chairman of Safestore over the last five and a half years and wish him well for the future. I am delighted to be succeeding him as Chairman and am looking forward to helping the business through the next exciting stage of its development."

Outlook

Whilst it is very early in the new financial year, there are signs that the positive trading momentum seen in Q4 is continuing with net new lets and reservations up on the comparable period.

Looking further ahead into 2014, we remain optimistic that our strong operational and cost focus, combined with an improving macro-economic outlook, will enable the Company to return to growth and deliver value to our shareholders.

Ends

1 - 'CER' is Constant Exchange Rate

2 - 'Q4 2012' is the three months ended 31 October 2012

3 - RevPAF is calculated as Total Revenue divided by total MLA

4 - Closing occupancy excludes offices but includes 76,600 sq ft of bulk tenancy as at 31 October 2013 (31 October 2012 -79,100 sq ft)

5 - at April 2013

6 - before costs associated with the transaction

7 - following a recent review of MLA across the estate and adjusting for the closure of Enfield South, Group MLA has been adjusted to 5.08m sq ft

Enquiries

Safestore Holdings plc	020 8732 1544
Frederic Vecchioli, Chief Executive Officer
Andy Jones, Chief Financial Officer
www.safestore.com
College Hill	020 7457 2020
Matthew Smallwood/ Mark Reed

Forward-looking statements: This announcement may contain certain forward-looking statements with respect to Safestore's expectations and plans, strategy, management objectives, future developments and performance, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Certain statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of Safestore speak only as of the date they are made. Safestore does not undertake to update forward-looking statements to reflect any changes in Safestore's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. Nothing in this announcement should be construed as a profit forecast.

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 ft7 of which 3.32 million sq ft is currently occupied.
	·      Safestore employs around 550 people.

 

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