Safestore Regulatory News (SAFE)

4 September 2013



Safestore Holdings plcThird quarter trading update for the period 1 May 2013 to 31 July 2013

On-Track for Full Year Expectations

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 quarter ended 31 July 2013 ("Q3 2013").

Key Measures

Headlines

· Further progress on strategic initiatives with national accounts occupancy up 29% on prior year

· UK business remains affected by the impact of VAT but performance in line with original estimates

· UK Gross Transaction Value up 8.7% in the year-to-date

· French business performing well, growing occupancy, rate and revenue

· Positive start to the fourth quarter with new lets up 4.5%

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

· Peter Gowers to be succeeded as CEO by Frederic Vecchioli(see separate announcement)

Peter Gowers, Chief Executive Officer commented:

"We continue to make good progress on our strategy. Performance has been resilient in the UK, with trading still affected by the introduction of VAT in the UK but within the guidance given to the markets in June 2012. In France, despite the tough operating environment, we have seen a good performance in the quarter, driven by our strong competitive position in the Parisian market. Early signs are that our fourth quarter trading is showing signs of sustainable improvement and the Board is confident that the Company will deliver a result in line with our expectations for 2013 and return to growth thereafter."

Operational Headlines

We have made further progress in the quarter on our key strategic initiatives. Our National Accounts business continues to grow and UK occupancy is now 29% higher than at Q3 2012 with 234,000 square feet let. This represents 9% of UK occupancy. Online enquiries in Q3 2013 were 18% higher than in the prior year and represent 81% of all enquiries in the year-to-date. Asset management opportunities continue to progress to plan, with further expected improvements in the terms of a number of leases and encouraging interest in the potential of our Whitechapel property for alternative use. Cost control remains tight and, over the full year, we will have delivered significant cost savings in comparison to the prior year.

UK - continuing to trade in line with guidance

The first three quarters of 2012/13 have been impacted by the Government's imposition of VAT on self-storage in the UK from 1 October 2012. For the year-to-date, gross transaction value on self-storage revenues (including the 20% VAT element) was up 8.7% on the previous year, demonstrating the continuing resilience of the business model and the customer's demand for self-storage. However, after taking into account the VAT payable, total revenue for the UK was down 7.6% for Q3 2013 and is down 6.0% or £3.3m for the year-to-date. This performance is within our initial guidance, given in June 2012, of a £5-6m full year reduction in revenue arising from the imposition of VAT.

Occupancy increased by 97,000 square feet in the quarter, bringing closing occupancy to 2.58m sq ft or 63.1% of our Maximum Lettable Area ("MLA"). This is 2.4 percentage points behind Q3 2012 (65.5%) but a 2.3 percentage point increase on our half-year position at 30 April 2013.

The average self-storage rate in the UK for the quarter was £21.27 which is 5.8% down on Q3 2012. RevPAF in the UK was £17.04 for the quarter, down 7.5% on the prior year but broadly unchanged from the half-year position.

France - new store performance driving strong growth

Our French business continues to trade well despite a challenging economic environment which reflects our strong market position. Total revenue for Q3 2013 was up 5.1% over the prior year in constant exchange rates and up 13.2% in sterling, reflecting a strengthening in the euro exchange rate.

French RevPAF was €30.52 in the quarter, up 2.5% on the same period last year. Occupancy increased by 21,000 square feet in the quarter, increasing closing occupancy to 0.76 million sq ft or 74.7% of MLA at 31 July 2013, up 2.1 percentage points compared to the half year position and 0.3 percentage points compared to 31 July 2012. The average self-storage rate per sq ft for Q3 2013 in Paris was €37.45, 2.4% higher than the same period last year.

Finance Expense

Gross debt is slightly lower than the half year position at £345m reflecting repayments in the French business. The full year net bank interest charge is expected to be in the range of £18.5- £19.0m excluding derivative movements and interest on finance lease obligations

Tax

The Group converted to a Real Estate Investment Trust ("REIT") on 1 April 2013 and from that date the Group benefits from a zero tax rate on its self-storage earnings in the UK. The Group only pays tax on the profits of the French business and on the profits attributable to the UK ancillary business, comprising primarily the sale of packing materials and insurance, and fees earned from the management of the Space Maker portfolio. REIT status gives the Group exemption from UK corporation tax on profits and gains from its qualifying portfolio of UK stores, provided certain criteria are met.

The Company's total reported underlying tax, using the EPRA5 measure which includes deferred taxes, is expected to be approximately £2.8 million for the full year, arising in the French business. However we expect the company's cash tax for the full year to be approximately £0.9 million principally due to the benefit of utilising tax losses in France.

Outlook

We have seen a positive start to the fourth quarter with new lets up 4.5% year on year in what is traditionally one of our softer trading periods. Our reservations book is also stronger than the prior year giving us cause for cautious optimism about future new let growth. In addition, our average self-storage rate is showing signs of improvement although it remains behind the prior year.

As we progress through the fourth quarter we expect the impact of the imposition of VAT to reduce as we pass the anniversary of its introduction on 1 October 2012 and are confident that we will deliver a result in line with the Board's expectations for 2013.

Looking further ahead to 2014, as recent macro-economic challenges diminish, we are optimistic that the UK business will return to growth and that the Company remains well positioned to drive growth in RevPAF and to benefit from the operating leverage its business model offers.

Ends

1 - 'CER' is Constant Exchange Rate

2 - 'Q3 2012' is the three months ended 31 July 2012

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

4 - Closing occupancy excludes offices but includes 59,700 sq ft of bulk tenancy as at 31 July 2013 (31 July 2012 -78,200 sq ft)

5 - 'EPRA' is the European Public Real Estate Association

Enquiries

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.

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