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Safestore slips to a loss in a difficult trading year
Safestore Holdings, the UK's largest self storage group, said today that it's FY2009 sales were £84.4 million (2008 £82.9million), but that LFL sales were down by £0.3 million or 0.4%, and reported a pretax loss of £9.42 million compared with a profit of £14.93 million in 2008. This figure was boosted by an exceptional tax credit of £5.5 million.
"Most of the loss was generated in the first half of the year when yields moved out quite a lot," said Safestore's chief financial officer Richard Hodsden.
"What we witnessed in the second half of the year was yield stability so we didn't see any particular yield compression or drift in the second half of the year and that meant that there was very little loss generated," he added.
Safestore Holdings has 95 stores throughout the UK, including 39 within the M25. In addition, it is the largest operator in central Paris with 22 stores. The firm achieved a space occupancy of 49.8% in the UK stores and 70.3% in it's Paris stores.
At 31 October 2009 Cushman & Wakefield LLP ("C&W") has valued the portfolio at £647.8 million, a year on year increase of £9.1 million (+1.4%) and £7.4 million (+1.2%) up from the half year valuation dated 30 April 2009, reflecting the new additions to the portfolio and an underlying loss of £41.6 million in 2009 compared with a loss of £8.3 million in 2008.
Net borrowings at 31 October 2009 stood at £272.0 million up from £268.4 million at 31 October 2008. During the year net assets decreased by £7.2 million or 2.8% to £248.6 million at 31 October 2009 from £255.8 million at 31 October 2008. The net impact is that the gearing level was 109.4% at 31 October 2009 compared to 104.9% at 31 October 2008
Safestore opened five new stores during the year: Clapham, Cardiff, Ipswich and Leicester in the UK and Longpont in Paris. All four of the newly opened UK properties are state of the art purpose built facilities with the store in Paris being a highly specified conversion. The new stores are trading ahead of expectations. All five of the new stores are freehold assets.
Safestore currently have a pipeline of six stores (including two relocations), three of which are in Greater London. Four of these stores are planned to open in the second half of 2010.
Safestore keeps the option of converting to a REIT under review, but as it continues to benefit from carried forward tax losses and the capital allowances that an expanding business can claim, there is no present advantage.
Steve Williams, Safestore's Chief Executive, commented
"FY2009 was another year of progress despite a challenging market. This was achieved by a strong management team with a flexible business model and market leading position. In particular, we are encouraged by the occupancy growth performance for the year ending 31 October 2009.
Since the year end, we have seen a continuation of these trends. Traditionally the first quarter of the financial year is the quietest trading period for the self storage sector, however we are encouraged by the improved occupancy performance in FY2010 versus FY2009 and, whilst we have seen a fall in occupancy in the quarter, this is in line with historical trading patterns and better than expectations. The rental rate per sq ft has continued to increase, helped by customer demand for smaller but higher yielding units.
Although it is difficult to predict trading patterns in this uncertain market, our strong balance sheet, the generation of strong cashflows from our operations and organic growth opportunities give us confidence of making further progress in FY2010."
The directors declared a final dividend of 3.00 pence per share bringing the total dividend to 4.65 pence per share for the year.
"Most of the loss was generated in the first half of the year when yields moved out quite a lot," said Safestore's chief financial officer Richard Hodsden.
"What we witnessed in the second half of the year was yield stability so we didn't see any particular yield compression or drift in the second half of the year and that meant that there was very little loss generated," he added.
Safestore Holdings has 95 stores throughout the UK, including 39 within the M25. In addition, it is the largest operator in central Paris with 22 stores. The firm achieved a space occupancy of 49.8% in the UK stores and 70.3% in it's Paris stores.
At 31 October 2009 Cushman & Wakefield LLP ("C&W") has valued the portfolio at £647.8 million, a year on year increase of £9.1 million (+1.4%) and £7.4 million (+1.2%) up from the half year valuation dated 30 April 2009, reflecting the new additions to the portfolio and an underlying loss of £41.6 million in 2009 compared with a loss of £8.3 million in 2008.
Net borrowings at 31 October 2009 stood at £272.0 million up from £268.4 million at 31 October 2008. During the year net assets decreased by £7.2 million or 2.8% to £248.6 million at 31 October 2009 from £255.8 million at 31 October 2008. The net impact is that the gearing level was 109.4% at 31 October 2009 compared to 104.9% at 31 October 2008
Safestore opened five new stores during the year: Clapham, Cardiff, Ipswich and Leicester in the UK and Longpont in Paris. All four of the newly opened UK properties are state of the art purpose built facilities with the store in Paris being a highly specified conversion. The new stores are trading ahead of expectations. All five of the new stores are freehold assets.
Safestore currently have a pipeline of six stores (including two relocations), three of which are in Greater London. Four of these stores are planned to open in the second half of 2010.
Safestore keeps the option of converting to a REIT under review, but as it continues to benefit from carried forward tax losses and the capital allowances that an expanding business can claim, there is no present advantage.
Steve Williams, Safestore's Chief Executive, commented
"FY2009 was another year of progress despite a challenging market. This was achieved by a strong management team with a flexible business model and market leading position. In particular, we are encouraged by the occupancy growth performance for the year ending 31 October 2009.
Since the year end, we have seen a continuation of these trends. Traditionally the first quarter of the financial year is the quietest trading period for the self storage sector, however we are encouraged by the improved occupancy performance in FY2010 versus FY2009 and, whilst we have seen a fall in occupancy in the quarter, this is in line with historical trading patterns and better than expectations. The rental rate per sq ft has continued to increase, helped by customer demand for smaller but higher yielding units.
Although it is difficult to predict trading patterns in this uncertain market, our strong balance sheet, the generation of strong cashflows from our operations and organic growth opportunities give us confidence of making further progress in FY2010."
The directors declared a final dividend of 3.00 pence per share bringing the total dividend to 4.65 pence per share for the year.
Fri, 29th Jan 2010