Last checked at 12 Nov 2014 07:00
12 November 2014
Safestore Holdings plcPost-close trading update for the year ended 31 October 2014
Strong final quarter, full year earnings expectations to be exceeded
Group Operating Performance | Q4 2014 | Q4 20132 | Change | Change- CER1 |
Revenue- like-for-like (£'m) | 26.1 | 24.5 | 6.5% | 8.4% |
Revenue (£'m) | 26.1 | 24.8 | 5.2% | 7.2% |
Revenue- like-for-like year-to-date (£'m) | 97.9 | 94.7 | 3.4% | 4.4% |
Revenue- year-to-date (£'m) | 97.9 | 96.1 | 1.9% | 2.9% |
Closing Occupancy (let sq ft- million) 3 | 3.46 | 3.32 | 4.2% | n/a |
Closing Occupancy (% of MLA)4 | 68.8% | 65.3% | +3.5ppts | n/a |
Average Storage Rate (£) | 24.65 | 24.31 | 1.4% | 3.4% |
Average Storage Rate (£)- year-to-date | 24.24 | 24.39 | (0.6%) | 0.5% |
Highlights
· A strong final quarter with Group like-for-like revenue in CER1 up 8.4% on Q4 2013
· Continued operational progress across the UK with new lets growth of 35.4% in the quarter driving an increase in closing occupancy of 3.1 percentage points to 66.6%
· UK rate up 4.4% in the quarter and like-for-like revenue growth accelerating to 10.1%
· Paris business continues robust performance with CER revenue up 4.3% for the quarter, with further improvement in occupancy and rate in CER and new lets at record levels
· Cash Tax Adjusted Earnings per Share7 likely to be slightly ahead of top end of consensus6
Frederic Vecchioli, Chief Executive Officer commented:
"I am pleased with the strong trading performance of the business in the final quarter and the significant progress we have made in driving operational improvements during the course of the year. Our team has responded well to the challenge and has lived up to our expectations, achieving a good improvement in the conversion rate of enquiries into new lets whilst at the same time reducing pricing discounts. The resulting revenue performance, combined with our continued focus on cost control and cash management, is likely to result in cash tax adjusted earnings per share being slightly ahead of the top end of consensus6 for the full year.
As we enter the new financial year we remain focused on the long term opportunity of filling the 1.6m square feet of currently unlet space. We will continue our strategy of driving the operational performance of the business whilst further leveraging our size and expertise in generating enquiries through the internet and I anticipate that the recent progress in the business and the renewed confidence of our sales team will continue as we enter the new financial year."
Business highlights
UK Trading Performance
UK Operating Performance | Q4 2014 | Q4 20132 | Change |
Revenue- like-for-like (£'m) | 19.6 | 17.8 | 10.1% |
Revenue (£'m) | 19.6 | 18.1 | 8.3% |
Revenue- like-for-like year-to-date (£'m) | 71.8 | 68.8 | 4.4% |
Revenue- year-to-date (£'m) | 71.8 | 70.2 | 2.3% |
Closing Occupancy (let sq ft- million) 3 | 2.68 | 2.56 | 4.7% |
Closing Occupancy (% of MLA) | 66.6% | 63.5% | +3.1ppts |
Average Storage Rate (£) | 22.94 | 21.97 | 4.4% |
Average Storage Rate (£)- year-to-date | 22.21 | 22.19 | 0.1% |
The UK business performed strongly in the final quarter with like-for-like revenue up 10.1%. Whilst the final quarter is typically a quarter in which the business experiences net vacates, the occupancy levels remained significantly higher than the prior year throughout the quarter. At the end of the year, UK occupancy was 66.6%, an increase of 3.1 percentage points on the prior year.
Our key focus throughout the year in the UK, has been on our store operational performance and on improving the conversion of enquiries at an appropriate rate to maximise revenues. New lets growth of 35.4% in the quarter and 19.8% for the year has continued to drive performance, with 125,000 sq ft of occupancy added over the year. Our pricing policy changes, implemented in the first half of the year, continue to be reflected in an improving rate. For the quarter, the average rate was up 4.4% and for the full year the rate was in line with the prior year.
The table below illustrates the continuing improving trading trends over the last 14 months.
Variance v prior year | Sep-13 | Oct-13 | Nov-13 | Dec-13 | Jan-14 | Feb-14 |
Mar-14 |
Total Revenue | (6.9%) | (5.3%) | (3.7%) | (2.9%) | (3.9%) | (1.5%) |
(0.3%) |
Like-for-like revenue | (5.5%) | (3.8%) | (1.3%) | (0.3%) | (1.3%) | 1.2% |
2.4% |
Closing Occupancy | (1.1%) | 0.5% | 1.6% | 2.2% | 2.6% | 2.8% |
4.0% |
Average Rate | (7.4%) | (4.8%) | (4.7%) | (4.4%) | (4.4%) | (2.8%) |
(1.9%) |
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Variance v prior year | Apr-14 | May-14 | Jun-14 | Jul-14 | Aug-14 | Sep-14 |
Oct-14 |
Total Revenue | 0.6% | 2.5% | 4.9% | 6.2% | 8.1% | 8.3% |
8.8% |
Like-for-like revenue | 2.9% | 4.4% | 6.6% | 7.8% | 9.8% | 10.0% |
10.4% |
Closing occupancy | 3.2% | 3.0% | 4.5% | 4.8% | 5.3% | 5.8% |
4.7% |
Average Rate | (0.9%) | 1.5% | 3.6% | 3.2% | 4.0% | 4.4% |
4.8% |
Paris Trading Performance
Paris Operating Performance | Q4 2014 | Q4 20132 | Change | Change- CER1 |
Revenue (£'m) | 6.5 | 6.7 | (3.0%) | 4.3% |
Revenue- year-to-date (£'m) | 26.1 | 25.9 | 0.8% | 4.4% |
Closing Occupancy (let sq ft- million) 3 | 0.78 | 0.76 | 2.6% | n/a |
Closing Occupancy (% of MLA) 5 | 77.2% | 71.9% | +5.3ppts | n/a |
Average Storage Rate (£) | 30.45 | 32.09 | (5.1%) | 1.8% |
Average Storage Rate (£)- year-to-date | 30.94 | 31.63 | (2.2%) | 1.4% |
Our Paris performance was strong in the final quarter with revenue on a CER basis up 4.3%. Our average rate, on a CER basis, improved by 1.8% on the same period in the prior year. Despite the closure of our Landy store in October 2014, the sq ft occupied was 20,000 sq ft ahead of the prior year. As a result, occupancy as a percentage of MLA increased by 5.3 percentage points to 77.2%.
Revenue growth for the full year was 4.4% on a constant currency basis. The impact of a 9% weakening in the Euro was partly mitigated by the foreign exchange swaps in place on €10.5m of Paris profitability, at an average rate of 1.236. The benefit of these hedging arrangements is reflected within EBITDA but not in the revenue line.
Our strategy of achieving an appropriate balance of rate and occupancy growth has been successful and we are now in the seventh consecutive quarter of year-on-year rate growth and sixteenth year of uninterrupted revenue growth.
Outlook
Our focus on improving our operational performance has been reflected in a strong revenue performance for the year. In addition, our continued focus on cost control and cash management is likely to result in cash tax earnings per share for the year being slightly ahead of the top end of consensus6.
We have strong market positions in both the UK and Paris and ample scope for further operational upside, with 1.6m square feet of space to fill. We remain fully focused on continuing our strategy of improving the operational performance of the business and are encouraged by the continued improvement in occupancy and rate trends as we head into the new financial year.
Ends
1 - 'CER' is Constant Exchange Rate
2 - Q4 2013 is the quarter ended 31 October 2013
3 - Closing occupancy excludes offices but includes 83,500 sq ft of bulk tenancy as at 31 October 2014 (31 October 2013 - 76,600 sq ft)
4 - MLA is maximum Lettable Area- following a review of MLA in 2013 across the estate and adjusting for the closures of Enfield South and St Denis Landy, Group MLA has been adjusted to 5.03m sq ft
5 - In France, our Landy store was closed in the period resulting in a reduction in MLA of 47,000 square feet
6 - As of 11 November 2014, based on the forecasts of 9 analysts, the consensus range for cash tax adjusted earnings per share for the year ended October 2014 is 12.6p to 13.1p
7 - 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
Enquiries
Safestore Holdings plc | 020 8732 1500 |
Frederic Vecchioli, Chief Executive Officer |
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Andy Jones, Chief Financial Officer |
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www.safestore.com |
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Instinctif Partners | 020 7457 2020 |
Matthew Smallwood Mark Reed |
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Notes to editors:
· | Safestore is the UK's largest self storage group with 133 stores. They include 97 wholly owned stores in the UK and 24 wholly owned stores in the Paris region together with 12 stores under management in the UK.
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· | The Company provides storage to around 46,000 personal and business customers.
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· | Safestore (excluding Space Maker) has a maximum lettable area ("MLA") of 5.03 million sq ft (including the expansion pipeline stores) of which 3.46 million sq ft is currently occupied.
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· | Safestore employs around 550 people. |