RNS Number : 6791N
Safestore Holdings plc
16 June 2010
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FOR IMMEDIATE RELEASE
16 June 2010
Safestore Holdings plc
("Safestore" or "the Company")
Safestore Holdings plc is the largest self storage company in the UK and Paris.
Interim Results Announcement for the six months ended 30 April 2010 (Unaudited)
'Rental rate and occupancy growth in both the UK and Paris'
Financial Highlights:
· Revenue increase of 2.8% to £42.4 million (2009: £41.3 million)
· Underlying EBITDA1 increase of 2.3% to £22.9 million (2009: £22.4 million)
· EPRA Adjusted Earnings per share3 ("EPS") increase of 17.6% to 3.68 pence (2009: 3.13 pence)
· Basic EPS3 of 2.56 pence (2009: a loss per share of 3.60 pence)
· As at 30 April 2010, Safestore's property portfolio was valued at £655.4 million, an increase of £7.6 million or 1.2% since October 2009
· Interim dividend increased by 3.0% to 1.70 pence (2009: 1.65 pence)
· New and increased bank facilities to August 2013
Operational Highlights:
· Average rental rate up 1.1% to £25.51 per square foot ("sq ft") on the same period last year
· Occupancy increased by 53,000 sq ft in the period compared to a loss of 11,200 sq ft in the comparable period last year. Overall, closing occupancy2 is 122,000 sq ft up on April 2009 at 2.83 million sq ft
· Over 40,000 customers, up 6.5% from April 2009
· Increased level of enquiries
· Good balance between business and domestic customers
· Continued benefits of UK national network - not dependent on London or housing market
· Continued strong performance in Paris
· Management contract for the 12 store Space Maker chain awarded to Safestore in May 2010
Steve Williams, Safestore's Chief Executive, commented:
"It is encouraging that the business has continued to perform well in what is still a challenging market.
The first half has seen an increase in revenue and underlying EBITDA over the same period last year which has been mainly driven by a solid rental rate and much improved occupancy movement performance in both the UK and Paris.
The second half of the year has begun positively with high levels of new enquiries and reservations, nearing the record levels seen in late 2007. We continue to see progression on the rate per sq ft and we have seen the underlying occupancy movement trading ahead of the prior year for 11 consecutive months. We believe that our operationally focused business model will continue to show resilience and our diversified store portfolio and customer base will continue to mitigate trading risk.
In May 2010, we were pleased to announce that Safestore has been awarded a six year management contract for the Space Maker self storage business. This gives the Company an additional revenue stream and the opportunity to grow the earnings of the business. The contract effectively commenced at the start of May 2010 and will be immediately earnings enhancing.
Safestore is the UK's largest self storage company and its strong balance sheet, cashflow generation and the new increased bank facilities will enable the Company to continue to selectively acquire new sites. This along with the natural operational gearing within the business model offer significant organic growth opportunities from the existing portfolio and keeps Safestore well positioned to take advantage of the favourable longer term trends for the self storage industry. The Board remains confident of the outcome for the full year.
1 EBITDA before exceptional items, contingent rent, gain/(loss) on investment properties and fair value movement of derivatives (underlying EBITDA)
2 Closing occupancy includes 21,000 sq ft of bulk tenancy (10,000 sq ft at 31 October 2009)
3 See note 9
For further information, please contact:
Safestore Holdings plc
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Tel: 020 7796 4133 on Wednesday 16 June 2010 and thereafter on 020 8732 1500
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Steve Williams, Chief Executive
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Richard Hodsden, Chief Financial Officer
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www.safestore.com
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Hudson Sandler
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Tel: 020 7796 4133
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Nick Lyon / Wendy Baker
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A presentation for analysts will be held at 9.30am today at Hudson Sandler, 29 Cloth Fair, London EC1A 7NN.
For dial-in details of the presentation please contact Sarah Hughes at shughes@hudsonsandler.com or telephone on 020 7796 4133.
Notes to Editors
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Safestore is the UK's largest self storage group with 128 stores including 95 wholly owned stores and 12 stores under management throughout the UK and 21 stores in Paris.
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The Company provides storage facilities to over 40,000 domestic and business customers.
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Safestore (excluding Space Maker) has a maximum lettable area ("MLA") of 5.4 million sq ft (including 9 expansion pipeline stores) of which 2.83 million sq ft is currently occupied.
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As the UK's only national self storage provider, Safestore is uniquely positioned to meet the needs of companies requiring a national service.
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A strong balance sheet and operational cash flow along with increased bank facilities allows Safestore to invest in continual improvements in the operational performance of its stores, in new store development and acquisitions where appropriate.
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Safestore employs around 500 people.
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Chief Executive's Review
Introduction
We are pleased to present Safestore's results for the six months ended 30 April 2010. The business has performed well and we continue to be encouraged by the resilience of our operating model.
Two significant events during the period were the delivery of new, increased and extended bank facilities providing the funding for the business out to August 2013 and being awarded the management contract of the 12 store Space Maker chain.
The Company's success in delivering improving rate and occupancy has generated growth in both revenue and underlying EBITDA. Occupancy movement in the period was positive at 53,000 sq ft, a significant turnaround from the negative 11,200 sq ft movement for the same period last year. Closing occupancy at 30 April 2010 was up 122,000 sq ft on 30 April 2009 at 2.83 million sq ft. Since the end of the first half occupancy and rental rate has continued to grow, underpinning the long term value of the Group. The financial outcome for the period is summarised in the table below:
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Six months ended
30 April 2010
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Six months ended
30 April 2009
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Movement
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(unaudited)
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(unaudited)
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£'000
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£'000
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%
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Revenue
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42,435
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41,293
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+2.8%
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Like-for-like* revenue
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39,936
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38,693
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+3.2%
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Ancillary revenue
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5,608
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5,426
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+3.4%
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Underlying EBITDA1
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22,928
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22,411
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+2.3%
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EPRA Profit after Tax (adjusted)2
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6,906
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5,855
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+18.0%
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Profit/(Loss) after Tax2("Earnings")
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4,795
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(6,750)
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EPRA Earnings Per Share ("EPS") (adjusted)2
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3.68p
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3.13p
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+17.6%
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Basic EPS2
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2.56p
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(3.60p)
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EPRA Net Asset Value ("NAV") per Share (adjusted)3
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197.2p
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200.6p
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-1.7%
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NAV per Share3
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134.1p
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130.3p
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+2.9%
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Dividend - Interim per Share
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1.70p
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1.65p
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+3.0%
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1 EBITDA before exceptional items, contingent rent, gain/(loss) on investment properties and fair value movement of derivatives
2 See note 9
3 See note 12
* Like for like stores are those that have been open for two full financial years
Strategy
Safestore is a market leader in the UK and Paris. It is ideally positioned to exploit the continuing trend to seek self storage as a space solution with a flexible offer to meet the needs of all its customers. In particular, we believe we have the structure in place to achieve increasing levels of occupancy and rental rates.
The executive team has consistently managed Safestore as an operational cash generative business, which is retail and customer led, focused on delivering optimal cash flow. The business continues to develop first class management information systems that allow the management team to have a centrally driven policy whilst managing the stores at a micro level particularly in relation to customer service, price and space management, enquiry generation and conversion. We believe this approach together with the depth of expertise of senior management, our highly motivated and engaged team, our comprehensive network of stores throughout the UK and the Paris region and our flexible business model clearly differentiates Safestore from its competitors. In addition, we recognise that our employees continue to be our biggest asset and we will continue to lead the way in our comprehensive training and coaching programmes.
Self storage represents an operational gearing investment model where 'growth' is delivered through building operational cash flow rather than Net Asset Value ("NAV"); which is the case with traditional Real Estate companies. We see a significant opportunity to deliver substantial revenue and earnings growth, at minimal cost and at low risk, from the operational gearing of the existing portfolio and pipeline stores.
Our primary focus will be on continuing to fill the existing 5.4 million sq ft of available space within the portfolio and optimise revenue per available sq ft. In addition, we will seek to achieve further growth through new store acquisitions, strategic bolt on acquisitions and new management contracts.
Marketing Overview
Safestore has maintained its marketing focus on the web with specific emphasis on generating high quality qualified traffic. This is reflected in search engine optimisation where Safestore consistently achieves the highest average natural ranking within Google under our main search terms. Online marketing will remain a specific area of focus for the business with natural and sponsored rankings forming the main basis of activity and spend.
Safestore leads the industry with its unique strategic and promotional alliances with a number of prestigious businesses including Tesco, Wickes, eBay and Europcar amongst others. During the period under review we have strengthened our partnership with eBay and have new agreements in place with Countrywide estate agents and O2. These partnerships not only increase revenue but also increase brand awareness and brand standing through our association with these leading businesses. This will continue to form a major part of our marketing and operational strategy at both a national and local level.
Customers
Safestore is the UK's only national player. The Group has an increasingly balanced mix of business and domestic customers seeking a self storage solution for a variety of reasons and, as a result, it is not overly exposed to any specific sector of the economy or geography. Length of stay has increased to 93 weeks from 91 weeks during the period under review.
Business customers
Business customers are an important part of a diverse customer base and account for 31% of all customers (measured by customer numbers) and 56% when measured by space occupied. Safestore is ide