Safestore Regulatory News (SAFE)

3 September 2015

Safestore Holdings plcThird quarter trading update for the period 1 May 2015 to 31 July 2015

Continuing strong performance

Highlights

· Like-for-like Group revenue for Q3 2015 in CER1 up 11.3% on Q3 2014 with good year-on-year performances across the business

o UK up 12.1%

o Paris up 8.9%

· Group closing occupancy3 of 72.2% (up 3.8 ppts on Q3 2014) at 3.61 million square feet ("sq ft") with particularly strong Paris performance

· Group average storage rate up 5.4% in CER1 in the quarter driven by strong UK performance (+6.8%)

Frederic Vecchioli, Chief Executive Officer commented:

"Now that we have annualised many of the operational initiatives implemented over the last 18 months, I am pleased to report continuing positive trading across the Group. I believe we can continue to improve performance further and we remain focused on the significant opportunity represented by our 1.4m square feet of currently unlet space.

In addition, the recent amendment and extension of our bank facilities has provided the Group with a reduced finance cost, longer debt maturity and improved balance sheet flexibility, and positions us well for continued growth.

As we look towards the end of the current financial year, we remain confident in generating cash tax adjusted earnings in line with the Board's expectations."

Business highlights

UK Trading Performance

The business performed well in the quarter growing like-for-like revenue by 12.1% despite having annualised a number of the operational and pricing initiatives from the previous year.

Our new lets increased by 14.3% in the quarter and 23.3% for the year-to-date reflecting improving conversion performance in our stores.

The third quarter is traditionally the busiest period in the year and, driven by the new lets performance, 105,000 sq ft of occupancy was added since the end of Q2 despite the previously announced closure of our New Malden store at the end of the quarter. As a result, occupancy increased by 2.8 percentage points compared to the prior year to 70.0% in Q3.

After adjusting our pricing policy in the first half of the prior year, we expected the pricing momentum to slow down in the second half of the current year. Our average rate for the quarter, however, remained strong and was up 6.8% year-on-year and, in absolute terms, was slightly ahead of our H1 2015 rate.

Paris Trading Performance

Our Paris business had a strong quarter growing like-for-like revenue by 8.9% in CER1. The impact of the significant weakening of the Euro in the period resulted in the Sterling equivalent revenue being 4.6% behind Q3 2014. This currency impact is partially offset by the benefits of our Euro hedging arrangements which benefit the EBITDA line when reported in Sterling.

Improving enquiries and consistent conversion performance resulted in 14.5% year-on-year growth in new lets in the quarter driving a particularly pleasing occupancy performance in Paris. The business grew occupancy by 37,000 sq ft since the end of Q2 resulting in closing occupancy of 80.8%, up 7.9 percentage points compared to the prior year.

Pricing was robust and our average rate was up 1.9% year-on-year in the quarter and, in absolute terms, was slightly ahead of our Q2 2015 rate.

We continue to pursue our strategy of growing revenue by achieving an appropriate balance of rate and occupancy growth.

Refinancing

As announced on 7 August 2015, the Group completed an amendment and extension of its bank facilities, the key terms of which were as follows:

· UK and Euro facilities were extended by two years from June 2018 to June 2020;

· The facilities consist of

o a £126m fully drawn term loan,

o an £80m revolving facility of which £30m is currently drawn and,

o a €70m revolving facility of which €45m is currently drawn;

· The margin, as compared to our previous facilities, reduced by 75 bps from 225 bps to 150 bps;

· Similarly, the non-utilisation rate on the undrawn facilities reduced from 1.0% to 0.6%;

· Removal of £30m of mandatory repayments of £5m every 6 months starting on 31 October 2015 through to 30 April 2018 previously required under the facilities;

· The Group also has the option to increase the quantum of the sterling revolving credit facility by £60m.

The Group has now completed the restructuring of its hedging in relation to the above amendment and extension and the results are included in the table below. Breakage costs in relation to the hedging exercise of £2.0m were incurred.

Based on the current level of borrowings and hedge rates, and taking into consideration the amortisation of initial fees, the Group's annual interest charge will reduce by c. £1.5m and the Group's overall cost of debt, including the existing $113m US Private Placement Notes, will be c. 3.8%.

Outlook

In Q4, reflecting normal industry trading patterns, we anticipate a reduction in occupancy compared to Q3. However, we are encouraged by early Q4 trading and, as we look towards the end of the current financial year, we remain confident in generating cash tax adjusted earnings in line with the Board's expectations.

Safestore has strong market positions in both the UK and Paris and, with 1.4m square feet of unlet space available, there is a significant operational upside in the existing portfolio. Whilst we are fully focused on further improving the operational performance of the business, our increased balance sheet flexibility also provides us with the opportunity to consider selective development and acquisition opportunities in our key markets.

Ends

1 - 'CER' is Constant Exchange Rate

2 - Q3 2014 is the quarter ended 31 July 2014

3 - Closing occupancy excludes offices but includes 62,772 sq ft of bulk tenancy as at 31 July 2015 (31 July 2014 - 65,572 sq ft)

4 - MLA is Maximum Lettable Area- following the closure of New Malden in July 2015, Group MLA has been adjusted to 5.00m sq ft

Enquiries

Notes to editors: